From a Service-Dominant Logic (S-DL) perspective, employees constitute operant resources that firms can draw to enhance the outcomes of innovation efforts. While research acknowledges that frontline employees (FLEs) constitute, through service encounters, a key interface for the transfer of valuable external knowledge into the firm, the range of potential benefits derived from FLE-driven innovation deserves more investigation. Using a sample of knowledge intensive business services firms (KIBS), this study examines how the collaboration with FLEs along the new service development (NSD) process, namely FLE co-creation, impacts on service innovation performance following two routes of different effects. Partial least squares structural equation modeling (PLS-SEM) results indicate that FLE co-creation benefits the NS success among FLEs and firm’s customers, the constituents of the resources route. FLE co-creation also has a positive effect on the NSD speed, which in turn enhances the NS quality. NSD speed and NS quality integrate the operational route, which proves to be the most effective path to impact the NS market performance. Accordingly, KIBS managers must value their FLEs as essential partners to achieve successful innovation from an internal and external perspective, and develop the appropriate mechanisms to guarantee their effective involvement along the NSD process.

Purpose: – The purpose of this paper is to investigate the relationship between innovative culture, innovation efforts, and their performance among knowledge-intensive business services (KIBS). Innovation intensity is evaluated in the technical and administrative domains. Performance indicators include customer-related outcomes and market and financial results relative to competition. To provide insight into how innovativeness contributes to sustaining a KIBS' competitiveness, the mediating role of its predisposition to involve customers and front-line employees in new service development is also considered. Design/methodology/approach: – In accordance with the objectives of the research, and from an extensive review of the literature, the authors develop a conceptual model and test it on a sample of 154 Spanish KIBS using structural equation modelling. Findings: – The results show that KIBS' appraisal of customers' and front-line employees' participation in new service co-creation is strongly determined by the firm's innovative culture. Organizations with a greater predisposition to new service co-creation achieve higher innovation rates which lead to sustained performance. Originality/value: – As dynamism of the KIBS sector has an impact on the whole economy it is also necessary to understand the most advisable management practices in KIBS to foster innovation and improved performance, although relatively few studies have approached this issue. The importance of customers and front-line employees as co-creators in new service development (NSD) is generally appreciated, although the literature is not conclusive with respect to the feasibility of co-creation and its influence on a firm's performance. The present research introduces an organizational perspective to approach co-creation by analyzing how various organizational cultural types (innovativeness, and the appraisal of front-line employees and customers as co-creators in NSD) interact and contribute to KIBS' competitiveness.

Hotels can strengthen their competitiveness by expanding their innovation process beyond the boundaries of the firm to exploit the valuable knowledge and skills of their customers. This study examines the effects of new service (NS) co-creation with customers in the hotel industry on NS performance, as well as the moderating role of top management support. The research also explores the main barriers faced by hotels to co-create service innovations. Partial least squares structural equation modelling results indicate that Customer co-creation exerts a direct impact on NS market outcomes and NS development (NSD) speed, which in turn favours NS quality. NS quality translates into better NS customer-related outcomes as well as in improved NS market outcomes. Top management support enhances the effect of Customer co-creation on the NSD speed. The main barrier to NS co-creation in hotels is to find customers interested in devoting time to this activity or with the appropriate knowledge and experience.