Organizational Innovation in Knowledge Intensive Business Services: The role of Networks, Culture and Resources for Innovation

Abstract

Among the service sector firms, knowledge-intensive business services (KIBS) are highly innovative. Traditionally, innovation has looked from a product or process innovation point of view. However, companies may also innovate in terms of their administrative processes and organizational structures, and this is referred to as Organizational Innovation (OI). Organizations have network relationships with their Customers (NC), Suppliers (NS), Select Competitors (NCOM) and Investors (NI). These networks are important sources of knowledge, technology and resources. Furthermore, the Culture for Innovation (CI) and Resources for Innovation (RI) within a firm needs to be considered. The study evaluates the role of NC, NS, NCOM, NI, CI and RI on OI. A cross-sectional survey of middle- to senior-level executives in KIBS firms in India was carried out, and it was found that CI and NI have a positive effect on OI, while NC has a moderately positive effect on OI. A culture for innovation in KIBS firms stimulates innovation. Strategic investors are able to bring knowledge from the outside world and thus play an important role in OI. Similarly, client relationships may foster OI as administrative processes, and organizational structures need to be aligned to the needs of the clients.