The perils of pleasing: Innovation-stifling effects of customized service provision

Matthijs J. Janssen (), Koen Frenken, Elena M. Tur and Alexander S. Alexiev
Additional contact information
Matthijs J. Janssen: Utrecht University
Koen Frenken: Utrecht University
Elena M. Tur: Eindhoven University of Technology
Alexander S. Alexiev: ESSCA School of Management

Journal of Evolutionary Economics, 2022, vol. 32, issue 4, No 6, 1264 pages

Abstract: Abstract Sensing customer needs capabilities generally help firms to utilize customer feedback. Yet, as research linking micro-economics to industrial dynamics has shown, a strong focus on such feedback may prevent an adequate response to more promising market developments. We analyse this tension for firms providing customized services, whose innovativeness heavily depends on customer input. By drawing upon an NK search model, we simulate various interactive search strategies. Our simulations result in hypotheses concerning the strategies’ relation to innovation-based turnover. We use survey data from 292 firms to substantiate our expectations empirically. Both our simulation and regression results point to a positive influence on turnover of sensing customer needs and of customer feedback. While the interaction effect is positive for non-customizing service providers, it is negative for their customizing counterparts. The latter group may fail to exploit their inventiveness, as they concentrate on tuning new services to the specific needs of existing customers rather than turning them into more widely marketable innovations.

Keywords: Customer feedback; Customization; Capabilities; Evolutionary search; NK; Simulation (search for similar items in EconPapers)
JEL-codes: D83 L80 O31 O32 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://link.springer.com/10.1007/s00191-022-00784-5 Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:joevec:v:32:y:2022:i:4:d:10.1007_s00191-022-00784-5

Ordering information: This journal article can be ordered from
http://www.springer.com/economics/journal/191/PS2

DOI: 10.1007/s00191-022-00784-5

Access Statistics for this article

Journal of Evolutionary Economics is currently edited by Uwe Cantner, Elias Dinopoulos, Horst Hanusch and Luigi Orsenigo

More articles in Journal of Evolutionary Economics from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().