Innovation Capability and Entrepreneurial Development: A Pathway to Competitive Advantage in Services Marketing

Abstract

Service firms have to be found in an environment where the service product is intangible, is a heterogeneous mix, and can be imitated rapidly, making it more difficult for these firms to find any sources of durable competitive advantage as compared to product-based industries. This paper proposes a conceptual framework of innovation capability and entrepreneurial development as co-factors of sustainable competitive advantage in services marketing. Based on the resource-based view and the dynamic capabilities perspective, the paper reviews recent empirical and conceptual studies on entrepreneurial orientation and innovation capability, organisational learning and absorptive capacity, and market performance, and concludes with an integrative framework, where entrepreneurial development creates capacity to sense and seize opportunities, innovation capability creates new service offerings and processes, and customer value creation is a mechanism that transmits these capabilities to a defensible market position. Involving six research propositions are presented to guide the future empirical test. The paper advances services marketing literature in two ways: First, it refocuses entrepreneurial development as a capability development process rather than a personality trait and second, it elucidates the mediating and moderating roles between innovation activity and competitive outcomes. Managerial implications for service sector SMEs, practical suggestions for fostering innovationoriented entrepreneurial cultures, and the need for a more impractical approach are also explored, as well as a call for further empirical research.