Service innovation strategies in financial service industry: the perspective of reverse product cycle and innovation type
Authors: Phil Yihsing Yang, Jian-Hang Wang, Wang-Yin Ruan
Journal: Chia Da Management Review. Dec. 2013, 33(2): 31-74.
Keywords: Service Innovation; Disruptive Innovation; Reverse Product Cycle; Firm Performance
Abstract:
The importance of service innovation has been widely recognized for enterprises in responding to
transformational economic structure. Previous studies have focused on manufacturing industry (e.g. product and
process innovation); little theoretical and empirical works have linked with financial service industry.
Little research investigated the appropriate service innovation strategies that influence firm performance.
This study developed a 2x2 matrix and classified innovation strategies into four cells including: Steady
Value-Added, Emerging Goals, Prosperous Business, and Satisfactory Efficiency according to the theories of
Reverse Product Cycle and innovation type. This study used 189 public listed financial banking firms in Taiwan
as samples. Ultimately, 48 general managers as the respondents returned valid questionnaires (a response rate
of 24%). Through the cluster analysis, the strategies Steady Value-Added, Emerging Goals and Prosperous
Business were clarified. Specifically, the firm performance of Steady Value-Added Strategy was higher than
those of Emerging Goals Strategy and Prosperous Business Strategy. The result shows that the disruptive
innovations are the majority in Taiwan's financial market; however, the sustaining innovations have the higher
impacts on firm performance than the disruptive innovations. The innovation strategies combined with
customized services help financial service firms to accurately respond to customers' demands and build
sustainable competitive advantages. Managerial and policy implications from the research findings were
provided in the conclusions.