Exploring the Relationship between Service Innovation and New Product Performance: The Moderating Effect of Market Linking Capability and Market Turbulence

Service innovation is significant in maintaining a firm's competitive advantage in an increasingly service-centered economy. Although there is a rich body of research on the role of service innovation in value creation for firms, little attention has been devoted to its effect on new product development. This study advances research on service innovation and market fit capabilities by examining how the capability of a service-based firm's market linking and market turbulence shapes the relationship between service innovation and new product performance. This study offers a theoretical framework that integrates both the resource-based view and market orientation perspectives of service innovation to investigate innovative service practices and activities that occur in contemporary service-based firms. Using an original dataset of 170 service-based firms from a service-centered economy, this study demonstrate that the combination of high market linking capability and high market turbulence are likely to strengthen new product development performance. Finally, the empirical results find that new product performance is highest in situations with high levels of service innovation, market linking, and market turbulence; therefore, the findings could support the proposed three-way interaction. Overall, these findings contribute to a better understanding of contexts in which service innovation represents an invisible specific asset or resource for service-based firms.