The Theoretical Study and Empirical Research Process of Service Innovation: A Literature Review

The industry of service has been progressing rapidly in recent years. In face of the financial crisis, innovation is becoming one of the most important factors along with the development of service innovation. It is important to fully consider characteristics both from theoretical and empirical perspective when identifying service innovation. This article conducts a systematic review of literature on research process of service innovation. In this paper, the research status on concept and typology of service innovation are demonstrated and classified in the second and third section, and three stages are discussed in the following, In addition, the development process is highlighted from four aspects: The customer, new service development and new product development, theoretical and empirical. At last, a recommended list of measures is provided for future theoretical study and empirical research.


Introduction
With the rapid development of economic globalization, accelerated social change, and lower threshold of industry entry, enterprises are facing increasing fierce competition.Innovation is perhaps the most powerful engine of growth in markets today.As the main body of innovation, service-oriented enterprises play a dominant role in the developing economy, Academics generally believe that service innovation has become significant daily around us.Banks roll out its financial derivatives; airline service improvement makes us feel more and more comfortable; Mobile operators launch so many new information service products that the customers couldn't attend to them all, and also the retailing experiences the great change in chain operation which happened in traditional department stores and supermarkets.All of these changings indicate the importance of service innovation no matter in macro level or micro level.potential profit.

Service Innovation
Service innovation theory initially from Schumpeter"s innovation theory.The systematic research for service innovation started from 1980s.Service innovation is a unit integrated with new concept, new target and strategic, new innovation methods, and new patterns (Van der Aa & Elfring, 2002).There is transformation of innovation concept, renovation of innovation mode or more ways to solve the problem, or provide higher added value (Tidd & Hull, 2003).Similarly, Sundbo believe that service innovation provide more and better ideas and technology to customers.It is important to improve service innovation connotation, service innovation concept to bring higher profit through providing reform and innovation of service concept process.
Since the service covers a very wide range scope, and there are a lot of differences in details, functions and characters of service industries, the definition and connotation of service innovation concept has not yet formed a unified understanding.Scholars define the service innovation from different perspective (see Table 1).2. Gallouj & Weinstein (1997).
We can find from the Table 1 that their definition still look at new to the methods, new to the concept, new to the technology and new to the customer although the majority of research takes the newness perspective.From the macro perspective, "service innovation" is the capacity of new innovation to create structure of market, technology and science in an industry.From the micro perspective, "service innovation" is a new innovation the services firms" concept, target or strategy, then to enhance customer satisfaction and firm"s profit.

Service Innovation Typology
The type of service innovation is varied in reality.There is no doubt that not all service innovation are the same.Many service innovation typologies are derived from the innovation of manufacturing industry, as product innovation, process innovation and market innovation.Schumpeter identified several different forms of innovation which lay the foundation of service innovation typology: New product, new means of production, new source of raw material or semi-finished product, new market, and new established organization.Over time, a large proportion of significant findings regarding service innovation have originated in the last 20 years.Many scholars have put forward their own views.In this section we will demonstrate different researchers who have labeled varying degrees of service innovation as different typologies.A review of the literature on service innovation reveals the following categorizations.See Table 2. Looking back upon the categories of service innovation, most scholars agree that "Reverse product cycle" took place the first milestone in service innovation which was provided by Richard Barras.However, "Reverse product cycle" started with the analysis framework of technology innovation, and indicated the different stages in service product cycle by using the product innovation and process innovation.There is no question that the early scholars, represented by Bassas, are deeply influenced by technology innovation theory paradigm.A classic example is the study of Gallouj and Weinstein.They divided the service innovation into six categories according to innovation characteristics, which includes Radical innovation, Improvement innovation, Incremental innovation, Ad hoc innovation, Recombinative innovation, Formalization innovation, and this typologies dynamically reveals the changing mechanism of service innovation.
Another viewpoint, Miles focused on the service innovation characteristics, leading to triadic-categorization: Product innovation, Process innovation, and delivery innovation.Similarly, Howells and Tether studied of 4 service industries and adopted this category.Furthermore, Den Hertog offered a matrix categorization, focusing on the essence of service innovation by mapping new service concept, new customer interface, new transmission system, and new technology choices.Other researchers study of service innovation by theoretically or case study.
After nearly two decades of development, service innovation research has changed from the state of decentralized, fragmented to systematically and scientifically.Thus, there is still lack of a clear and general criterion for service innovation definition and the category boundaries of service innovation is still vague.Most classification are still in the stage of theoretical research.It is still the question whether this category can be applied into service industries.As the foundation of service innovation, the research of service innovation category has a profound influence to deepen and broaden the service innovation studies.

General Situation of Service Innovation Literature
In order to getting a comprehensive understanding of service innovation research process, it is necessary to make a deep analysis of the literature.In this section, we will identify how many researchers have studied service innovation and the relationship between them based on the 4663 papers downloaded (Including title, key words, topic, abstract, quotation).All the paper comes from the database platform of Web of Science (Including SCI-EXPANDED，SSCI，CPCI-S，CCR-EXPANDED，Derwent innovation index, CSCD, In Cites), and makes a historical chronological chart to find the relationship, the research history and future trend of the literature.

The Important Literature in Service Innovation
In this section, we will choose LCS as the measurable indicators to evaluate the importance of the paper.As Figure 7 depicted, it has shown the top ten references."Innovation in service" of Gallouj and Weinstein, ranking top 1, was cited by other paper for 171 times, which indicates this paper occupies an extremely important position in service innovation studies.The top 2 and 3 are the paper written by Drejer in 2004 and Sundbo in 1997, the reference number are 86 and 74 respectively.There is no doubt that these paper are the classic literature and have quite influence on service innovation.

The Research Context of Service Innovation
To find out the content and the relationship of these literature, we make an in-depth analysis of top 40 paper by using drawing tools (As Figure 8 shows).One circle repents for one paper, the bigger the circle, the higher the citation is.The figure is given by the system automatically, and the arrow points to the literature which is referenced.From the Figure 8   As the research references illustrated above which have shown the LCS top 40 in Figure 8, we can analysis the research development of service innovation from the longitudinal and seek out the thread of thoughts (marked in red square).The first source paper is Innovation in service which written by Gallouj and Weinstein in 1997 (No.170), and referenced by Gadrey and Gallouj. in 2001 (No. 457).Tether studied German business case and supported the service innovation typology proposed by Gallouj and Weinstein.As time goes on, Drejer (No. 841) extended the concept and research methods of service innovation from the theoretical and conceptual and quite approve of Tether"s standardization service concept.Based on the innovation research results in German, Hipp and Grupp believed that the analysis of manufacturing and services should be combined together, and it also conforms to Gallouj, Weinstein, and Drejer"s point of view.

Development Phase of Service Innovation
From the horizontal perspective, the literature can be divided into three parts, ranged from 1994 to 1997, 1998 to 2006 and 2007 to 2010 (See Figure 9).In this section, we will discuss them respectively as following.From the quantitatively perspective, the number of paper in each year is less than 100 before 1997, it is the exploratory stage of service innovation.

•
From the research content, the paper mainly focus on service innovation definition, typology, and influencing factors.Be more specific, these paper emphasis more on the customers who have played important role in the process of the new services development and the comparison between new products development and new service development.

•
In terms of research method, this period studies are mainly theoretical research, and the relevant conclusions was drawn through the investigation.Mid-Term Stage (2001-2001) At this stage of service innovation, the research system of service innovation had formed, of which Drejer published Identifying innovation in surveys of services: A Schumpeterian perspective in 2004, ranking 2nd of LCS.This paper mainly emphasized the Schumpeter"s innovation point of view and sorted out the previews service innovation research.However, these concepts are still not out of Schumpeter innovation concept and didn"t expand and deepen the characteristics of service.During this period, the empirical research on service innovation had been studied plentifully.For example, Tether BS discussed the enterprises" innovation and external team cooperation based on the second investigation of Community Innovation Survey in European countries (CIS-2).This paper points out that we should be priority to the market, rather than the enterprise 33.In the same year, Tether BS explored the difference between knowledge intensive service and technology service enterprises according to the survey of service enterprise in Germany, pointing out these two companies will invest more than the other service enterprises.In addition, Avlonitis divided service innovation into New service in market, New service in enterprise, New delivery process, Service line expand, Service Improvement according to novelty, but this typology is still with the traces of product innovation.The research period presents the following features:

Service Innovation Research of
• The article number increased significantly and the quantity of paper shows a trend of gradual increase in each year.From the Figure 8, the paper has appeared in each type and has a higher reference.This changing illustrated that researchers pay more and more attention to the field of service innovation and service innovation research system began to continuous improvement.

•
Compared with early research, the studies in service innovation experienced an obvious progress.The researchers reached agreement to Gallouj"s point of view and other relative issues, including the concept, typology and innovation process, and these articles are referenced by future researchers.

•
Empirical research started to become more abundant.Researchers investigated and collected data from different countries and industries to support service innovation studies, including the knowledge intensive services companies, consulting companies, etc.  Integrated the above, we can see that after 2007 service innovation shows the characteristics of diversified development.The characteristics of the phase can be summarized as follows: • Compared with early and mid-term studies, the number of articles has increased dramatically during this period, especially in 2008.Similarly, the literature citation is also increasing at the same time.

•
Service innovation theory research begin to combine with other subjects, such as policy, public service, etc., and make more in-depth theoretical study, such as the nature of innovation and service innovation, radical service innovation and leaders combined management, etc.

•
The method and tools are more diversified and the empirical research are more abundant.Financial sector, retail and manufacturing service innovation research are also involved.

Customer Research of Service Innovation
From the horizontal perspective of literature reference diagram (Figure 8), service innovation can be mainly divided into four types.The first perspective stands in the left side in terms of customer.Atuahene Gima (1996) (No. 80) agreed that service enterprises should pay more attention to the quality relationship between the customer.Enterprises should choose those who have the ability to establish long-term and close-contact with customers .Similarly, the paper of Leonard (1997) (No. 1997) provided a new way of empathy design which bring customers into the company and observe their condition to experience the products and services.In this way they could know about the customer demand which cannot find by the questionnaire.Actually the customers were the designer of new service and enterprises should recognize the customer"s requirements.Furthermore, Alam (No. 573) (No. 1222) and Matthing (No. 793) all explored customer target, customer interaction and customer service development model, etc. in service innovation.

New Service Development (NSD) and New Product Development (NPD) of Service Innovation
In Figure 8, we can find that there are more and more studies in this aspect.Avlonitis (2001) indicated that product innovation plays a pivotal role in new service development and performance, and service innovation development process can be divided into new service activities, new service development process and cross-functional participation.In Menor"s paper which published in 2002 points out that NSD is not a traditional development process, requiring constantly exploration, utilization and elaboration.The paper identify the relevant concept as well, the process and performance of NSD.Henard (2001) integrated the literature of NPD performance and figured out the influencing factors, including product advantage, market potential, customer requirements and dedicated resources.
As the above literature demonstration, this perspective aspects are mainly concentrated on NPD and NSD exploration, the development process and the performance issues.In addition, Debrentani and Cooper who discussed before all probe into new service product and new service development.

Theoretical Research of Service Innovation
The theoretical research is also the main vein of service innovation.As Gallouj and Drejer stated before, they emphasized the concept, the typology, the process and the performance of service innovation and also indicated Schumpeter"s innovation view need to be developed combine with characteristics of the service itself.These documents concentrated on summarizing the theory of service innovation.

Empirical Research of Service Innovation
This kind of service innovation research pay more attention to the empirical research.Bessant analyzed the technology transfer issues of service innovation based on investigation of consultation industry in 1995.On account of network operators Lucent technologies, the Application Service Providers (ASPs), Network Service Providers (NSPs) and service suppliers and providers (CCSPs) were discussed in Brenner MR" s paper in 2000.
Tether BS (2002)discussed the innovation pattern relation between innovation enterprises and external cooperation partners from the UK and the second commission innovation survey in service enterprise in Europe(CIS-2).In 2006, Howells J investigated the effect of mediation in the process of service innovation which based on the investigation of the service enterprises in UK.Throughout this kind of literatures, we can come to the conclusion that these articles analysis and summarize from the perspective of actual investigation, or investigation results of previous researchers, and figure out the research conclusions and results.

Service Innovation Research Summary
In this section, we make an analysis of research status and development on service innovation.It can be concluded as earlier, System formed and diversified development three stages from the longitudinal, and Customer research, NSD, and NPD, theoretical research and empirical research from horizontal.Furthermore, this section reviews and represents the representative literature in different stages and types, highlights the key point and existing deficiency.It can make a more clear understanding of service innovation and it can also provide the enlightenment and reference for the further study.

Conclusion and Future Research
At present, researchers has already contended all aspects of the service innovation, basically reveals the service innovation discipline from micro level under the background of service innovation, but still lack of research in medium and macro level.Looking forward to future research, academics need to pay enough attention in following aspects.
(1) Summarized the theory with practice.Although service industry has certain common in itself, it is still a problem that whether the theory can be put into practice because of the difference in internal and external environment, development stage and consumption level.At present, the current domestic service innovation research mainly fix on the theoretical research.Service innovation studies should start from the enterprises demand, and do a lot of survey and in-depth interviews, and then really understand what kind of service innovation theory the enterprises need.In this way, we can summarize the service innovation theory which has the guiding significance to improve the enterprise service innovation ability, and to achieve the perfect combination of theory and practice.
(2) Pay more attention to the core role of ICT in service innovation and discuss the deep relationship between ICT and enterprises service innovation.And further discussed the ICT of service innovation in empirical studies.
(3) How to improve enterprise staff"s service innovation ability.Enterprise staff played an important role in service innovation, especially in service innovation demand and promoting enterprise innovation ability.It is necessary to make an in-depth discussion in the relationship between enterprise staff and service innovation ability.
(4) In recent years, although there are more documents of customer orientation and customer loyalty, the importance of customers in service innovation didn"t get enough attention in the study.Further research should take a deep research on how to make the customer actively participate in service innovation and how to improve customer satisfaction and loyalty.
At present, the economic development tendency of "service" has become increasingly apparent and important, the industry as a service and service industrialization have become the trend of the development of the modern economy.Compared the developed countries with developing countries we can find that there are still many gaps.
In the process of development of service economy, we should carefully study how to establish and improve the service innovation management theory system and the practice of the service innovation management and try to make service innovation becomes a powerful tool for enhance the competitiveness of enterprises.

From
the time perspective, the published paper in each year increased gently before 2007, and then it rises sharply in 2008, peaking at 517, and falling to 456 from 2008 to 2013.As Figure 3, 4 depicted the publication in 2008 and 2009 accounts for 11.1% and 10.7% respectively.Furthermore, with the studies comes to mature in the period from 1995 to 2013, the citations of paper experiences a slight growth year by year, from less than 10 citation in 1997 to more than 7000 citation in 2013.All these figures point out those researchers have paid more attention to the service innovation studies.

Figure 3 .
Figure 3.The published items and citation in each year (The deadline of download data is May 29, 2014)

Figure 7 .
Figure 7.The top ten paper on service innovation reveals, we can find out that the influential source documents of service innovation.Debrentani (Figure 8, No. 42)  discussed the development of new manufacturing services, success and failure, which was published in 1995, and probes into the new service development of five scenarios, three success types and two failure types. 36Similarly in 1994, Cooper RG (Figure 8, No. 27) published the paper how to distinguish the new service products.Another original paper was published in 1995, the new model of innovation, service industry how to make a profit.The author Gadrey and Gallouj.discusses why service innovation is often overlooked in the study of economic theory, what the main form of service innovation is and how to broaden and enrich service innovation.The other three important paper is Sundbo (No. 154), Gallouj (No. 170), published in 1997 respectively and Drejer (No. 841), published in 2004.Related to the Figure6we can easily find that these paper not only have high citation, but also are in a top 3. Thus the following papers are based on these three and the circle also larger than the others.

Figure 8 .
Figure 8. LCS of service innovation research in top 40 literature and interrelationship

Figure 9 .
Figure 9. Literature analysis of service innovation

Figure 11 .
Figure 11.Service innovation research reference diagram of 1998-2006 4.3.3Service Innovation Research of RecentStage (2007-Present)    The literature of recent years presents diversified development trend.Oke pointed out that there is a closer relationship between radical innovation and incremental innovation and radical innovation related to the innovation management practices, which published in Innovation types and innovation management practices in service companies.Service companies need to continuously pursue radical, imitation and incremental Innovation activities, especially the radical innovation.Moreover, innovation type, management practices and innovation performance are discussed and analyzed.Miles I advanced multiple development of service innovation in Patterns of innovation in service industries in 2008, and put forward that the market, product, enterprises and technology are totally different from the primary industry and secondary industry.The paper Emergence of innovations in services in 2009, written by Toivonen, addressed the general theories of service, general theories of innovation, and the relationship between new service development and innovation management in multidisciplinary perspective.

Table 1 .
Summary of service innovation definition

Table 2 .
Summary of service innovation typology