AbstractsBusiness Management & Administration

Service innovation refers to the adoption of new problem-solving ideas when a business provider creates or delivers a service to customers. With the global shift from a manufacturing-based to a service- and knowledge-based economy, service innovation has been championed as a way for service firms to perpetuate profitability. In this thesis, I attempt to examine three unresolved issues on the service innovation of a team. First, what kind of novel acts take place during the process of service encounter? Second, how the social relation of a team with other teams affects the service innovation of the team? Third, how service innovation and service quality interactively affect team performance? In addressing these issues, I propose a social relational model of service innovation at a team level. Specifically, I develop a 2 by 2 typology of social capital based on the source (structural vs. relational) and the level (vertical vs. horizontal) of social capital, and explain how social capital is related to service innovation, which subsequently affect team performance. To test the model, I conducted two empirical studies on 175 retail shops of a large retail apparel firm. In the first study, I extended the service blueprinting method to develop an observation template for creative service encounters. Participant observation was conducted in the retail shops to study how frontline employees improvised to serve customers. In the second study, I collected data on social capital and innovation of the teams from two separate surveys. Regression analysis showed that (1) relational and structural social capital at vertical and horizontal levels affected service innovation differently, (2) relational social capital moderated the effect of structural social capital on service innovation, and (3) service quality mediated the effect of service innovation on team performance. This thesis advances theoretical understanding on the nature of service innovation, the richness of social relational antecedents of service innovation, and the complex interaction between service quality and service innovation on team performance. Results also inform managers with an observation template to objectively assess service innovation in retail teams and some advices on fostering cooperation among competing teams for the highest team performance.