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At the forefront of service transformation in the digital era
 

Tor W Andreassen

NHH Norwegian School of Economics.

The CSA hosted Tor W Andreassen an academic from NHH Norwegian School of Economics.

Before he left us he gave us a presentation showing us what he was up to during his stay - please see the below summary of this talk

Perceiving Innovation: Unveiling the Impact on Market Performance

Andreassen, Tor W. (2024) appearing in the Journal of Service Research.

In their significant study, in collaboration with the Norwegian Innovation Index, Keiningham and colleagues (2024) explore the interplay between customer perceptions of innovativeness and market performance. This work leverages data from 123 S&P 500 companies over five years, intersecting with the American Satisfaction Index and the American Innovation Index.

Key Findings

Impact on Abnormal Stock Returns:

  • The study examines whether customer satisfaction and perceived innovativeness individually or collectively influence abnormal stock returns.

  • Historical studies by for example Claes Fornel, Gene Anderson, and Roland Rust have linked customer satisfaction to productivity and stock returns. This research extends that linkage by including the perceived innovativeness metric.

Stronger Driver:

  • The results suggest that customer satisfaction and perceived innovativeness drive abnormal stock returns. Perceived innovativeness might be a more substantial predictor of abnormal stock returns compared to customer satisfaction alone.

Research Methodology

Sample and Data Collection:

  • The study analyzes data over five years from 123 companies listed on the stock exchange, appearing in the American Satisfaction Index and the American Innovation Index.
  • Utilizes customer surveys to gauge perceptions of quality, satisfaction, and innovativeness, collected continuously throughout the year to capture timely innovations' effects.

Commentary and Conceptual Model

Linking Firm Activities to Market Performance:

  • My commentary focuses on developing a conceptual model explaining how firm activities (resource allocation, quality improvement, innovation efforts) impact perceived innovativeness and satisfaction, subsequently influencing market performance.
  • Emphasizes that satisfaction and innovativeness through perceived relative attractiveness, contribute to firm value.

Adequate Satisfaction vs. Perceived Innovativeness:

  • While optimal satisfaction levels are essential, diminishing returns exist beyond a certain point. Innovativeness, reflected in perceived attractiveness, drives competitive advantage and market performance.

Future Directions

Empirical Testing in Broader Contexts:

  • Expanding this research beyond the American and Norwegian contexts to validate findings across different markets.
  • Investigating the potential differential impact of various types of innovations (incremental vs. radical) on stock performance.

Conclusion

The research by Keiningham et al. (2024) offers a robust framework linking customer perceptions to financial outcomes, underscoring the importance of innovation in achieving superior market performance. This commentary elaborates on the theoretical underpinnings and practical implications, emphasizing the need for firms to balance quality and innovation strategically.

Additional Papers

1.    "Social Profit Orientation": Berry, Danaher, Keiningham, Akzoy, and Andreassen (2024), forthcoming in the Journal of Marketing

  • This qualitative study, involving interviews with global leaders, examines a new business orientation where firms pursue profit while addressing societal good.
  • Differentiates from traditional CSR by embedding a deeper, conviction-based commitment to societal impact.

2.    "B2B Sharing Economy":

  • A conceptual exploration of the sharing economy in a B2B context, defining it as an asset-light intermediary platform facilitating temporary access to physical assets.
  • Differentiates B2B sharing models from B2C examples like Airbnb, highlighting unique business model considerations.

These papers collectively advance understanding in their respective fields, providing valuable insights into how firms can strategically leverage innovation and societal commitment to enhance market performance and societal impact.

Cambridge Service Alliance

Welcome to the Cambridge Service Alliance…

  • A unique global alliance between the University of Cambridge and some of the world’s leading businesses.

  • Help organisations to address the challenges they will face in the next three to five years, through rigorous research, practical tools, insights and education programmes.

  • Learn how other innovative organisations are developing new services through our events

  • Since its inception in 2010 industrial partners have included CEMEX, GEA, IBM, Pearson, Zoetis, HCLTech, Bouygues UK among others.