The role of knowledge management strategies and task knowledge in stimulating service innovation

Are service firms that enact strategies to manage their new service development (NSD) knowledge able to generate a sustainable competitive advantage (SCA)? Based on analysis of data from a large survey of service companies, the answer is yes. We find that companies employing the knowledge management strategies of codification and personalization reflect higher levels of NSD knowledge. However, the two strategies vary in their individual performance outcomes, with codification promoting NSD proficiency (an ability to execute NSD activities) and personalization promoting greater NSD innovativeness (market perception of the company as novel and as an innovator). When used together, the two strategies magnify NSD knowledge, which when combined with NSD proficiency and NSD innovativeness, promote a SCA. Therefore, companies planning to invest in a knowledge management system should heed the outcomes desired from their NSD process. A system based on documentation exemplifies a codification strategy and will drive NSD proficiency; a system emphasizing interpersonal communication exemplifies a personalization strategy and will drive NSD innovativeness. A system that blends the two strategies appears the most advantageous for service companies’ NSD efforts aiming to build a long-term sustainable competitive advantage.