Implications for Strategy and Industrial Change
Edited by Ken Green, Marcela Miozzo and Paul Dewick
Chapter 3: Innovation, Consumption and Knowledge: Services and Encapsulation
Jeremy Howells1 1. INTRODUCTION The role that consumption plays in the innovation process within the ﬁrm and in the formation remains a neglected aspect of a ﬁrm’s capabilities. Thus consumption and the way ﬁrms consume intermediate goods and services form an important, but neglected, part of a ﬁrm’s capability set. The role of services is highlighted in this review and discussion. This is because by introducing a service dimension to the discussion about innovation, a new perspective is shed on the process of consumption and its relationship within innovation within the ﬁrm. This is for three interrelated reasons. Firstly, it is suggested that services are important in the consumption of new goods (and services). Secondly, the way (i.e. the routines that they can potentially develop) ﬁrms consume (intermediate) goods yields service-like attributes and these form important and distinctive capabilities for the ﬁrm. Lastly, related to this, the process of consumption and the development of routines associated with this process are forms of disembodied, service innovations. The analysis seeks to focus on the role of consumption in inﬂuencing innovation in intermediate goods and services. It is presented here that this is a neglected ﬁeld of research for a number of reasons. Firstly, despite a number of studies, the role of consumption and demand in the innovation process still remains largely neglected. Secondly, and in particular, the role of consumption in service innovation has only been brieﬂy commented upon. This is particularly true in connection with the consumption by ﬁrms...
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