Determinants of Innovative Performance in the Service Industry: A Review

The rising demand on quality product and services has contributed to more business opportunities and intense competition. Firms are trying all out to be innovative in their performance to stay competitive and ultimately for the economic growth of their business. Conventional unchanging style of business model is seen to be abolished gradually especially in the dynamic industries that require fast-changing business model to suit the demand of the market. People are not only looking at the output as products or services, but the innovativeness in presenting the outcome of the process. A number of previous literature and empirical studies have revealed the importance of innovative performance in the manufacturing industries but less attention has been given to the service sector that is increasingly important as demand arises. Therefore, it is essential to understand the factors that contribute to innovative performance for the firms to formulate appropriate strategies to develop their business model. In this review, we look into the determinants of innovative performance in the service industry namely intellectual capital, market orientation and organizational capabilities.