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Users as service innovators: The case of banking services

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  • Oliveira, Pedro
  • von Hippel, Eric
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    Abstract

    Many services can be self-provided. An individual user or a user firm can, for example, choose to do its own accounting - choose to self-provide that service - instead of hiring an accounting firm to provide it. Since users can 'serve themselves' in many cases, it is reasonable to suspect that they can also innovate with respect to the services they self-provide - possibly without the assistance of service providers. In this paper, we conduct the first quantitative exploration of the importance of services innovation by users, focusing on the field of commercial and retail banking services. We find that 55% of today's computerized commercial banking services were first developed and implemented by non-bank firms for their own use, and 44% of today's computerized retail banking services were first developed and implemented by individual service users rather than by commercial financial service providers. Manual precursors to these services - manual procedures that carried out functions similar to computerized services in our sample - were almost always developed by users as self-services. Our empirical findings differ significantly from prevalent producer-centered views of service development. We speculate that the patterns we have observed in banking with respect to the major role of users in service development will prove to be quite general. If so, this will be an important matter: on the order of 75% of GDP in advanced economies today is derived from services. We discuss the implications of our findings for research and practice in service development.

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    Bibliographic Info

    Article provided by Elsevier in its journal Research Policy.

    Volume (Year): 40 (2011)
    Issue (Month): 6 (July)
    Pages: 806-818

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    Handle: RePEc:eee:respol:v:40:y:2011:i:6:p:806-818

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    Web page: http://www.elsevier.com/locate/respol

    Related research

    Keywords: Service innovation Service development User innovation;

    References

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    1. Franke, Nikolaus & Shah, Sonali, 2003. "How communities support innovative activities: an exploration of assistance and sharing among end-users," Research Policy, Elsevier, vol. 32(1), pages 157-178, January.
    2. Eric von Hippel, 1986. "Lead Users: A Source of Novel Product Concepts," Management Science, INFORMS, vol. 32(7), pages 791-805, July.
    3. Franke, Nikolaus & Hippel, Eric von, 2003. "Satisfying heterogeneous user needs via innovation toolkits: the case of Apache security software," Research Policy, Elsevier, vol. 32(7), pages 1199-1215, July.
    4. Eric von Hippel, 1994. ""Sticky Information" and the Locus of Problem Solving: Implications for Innovation," Management Science, INFORMS, vol. 40(4), pages 429-439, April.
    5. Gary L. Lilien & Pamela D. Morrison & Kathleen Searls & Mary Sonnack & Eric von Hippel, 2002. "Performance Assessment of the Lead User Idea-Generation Process for New Product Development," Management Science, INFORMS, vol. 48(8), pages 1042-1059, August.
    6. Pamela D. Morrison & John H. Roberts & Eric von Hippel, 2000. "Determinants of User Innovation and Innovation Sharing in a Local Market," Management Science, INFORMS, vol. 46(12), pages 1513-1527, December.
    7. Glen L. Urban & Eric von Hippel, 1988. "Lead User Analyses for the Development of New Industrial Products," Management Science, INFORMS, vol. 34(5), pages 569-582, May.
    8. Pavitt, Keith, 1984. "Sectoral patterns of technical change: Towards a taxonomy and a theory," Research Policy, Elsevier, vol. 13(6), pages 343-373, December.
    9. Ann H. Spiotto, 2002. "Financial account aggregation: the liability perspective," Occasional Paper; Emerging Payments EPS-2002-1, Federal Reserve Bank of Chicago.
    10. de Jong, Jeroen P.J. & von Hippel, Eric, 2009. "Transfers of user process innovations to process equipment producers: A study of Dutch high-tech firms," Research Policy, Elsevier, vol. 38(7), pages 1181-1191, September.
    11. Baldwin, Carliss & Hienerth, Christoph & von Hippel, Eric, 2006. "How user innovations become commercial products: A theoretical investigation and case study," Research Policy, Elsevier, vol. 35(9), pages 1291-1313, November.
    12. Ogawa, Susumu, 1998. "Does sticky information affect the locus of innovation? Evidence from the Japanese convenience-store industry," Research Policy, Elsevier, vol. 26(7-8), pages 777-790, April.
    13. Peter Tufano & Daniel Schneider, 2009. "Using financial innovation to support savers: from coercion to excitement," Communities and Banking, Federal Reserve Bank of Boston, issue Spr, pages 6-8.
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    Citations

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    Cited by:
    1. Crass, Dirk & Schwiebacher, Franz, 2013. "Do trademarks diminish the substitutability of products in innovative knowledge-intensive services?," ZEW Discussion Papers 13-061, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    2. Lars BENGTSSON & Natalia RYZHKOVA, 2013. "Managing Online Users in Open Innovation: The Case of a Nordic Telecom Company," Communications & Strategies, IDATE, Com&Strat dept., vol. 1(89), pages 37-53, 1st quart.
    3. Letty, Brigid & Shezi, Zanele & Mudhara, Maxwell, 2012. "An exploration of agricultural grassroots innovation in South Africa and implications for innovation indicator development," MERIT Working Papers 023, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    4. Harirchi, Gouya & Chaminade, Cristina, 2014. "Exploring the Relation Between the Degree of Novelty of Innovations and User–Producer Interaction Across Different Income Regions," World Development, Elsevier, vol. 57(C), pages 19-31.
    5. Füller, Johann & Schroll, Roland & von Hippel, Eric, 2013. "User generated brands and their contribution to the diffusion of user innovations," Research Policy, Elsevier, vol. 42(6), pages 1197-1209.
    6. Adams, Pamela & Fontana, Roberto & Malerba, Franco, 2013. "The magnitude of innovation by demand in a sectoral system: The role of industrial users in semiconductors," Research Policy, Elsevier, vol. 42(1), pages 1-14.
    7. Maxim Kotsemir & Alexander Abroskin & Dirk Meissner, 2013. "Innovation concepts and typology – an evolutionary discussion," HSE Working papers WP BRP 05/STI/2013, National Research University Higher School of Economics.
    8. Fernando A. F. Ferreira & Sérgio P. Santos & Paulo M.M. Rodrigues & Ronald W. Spahr, 2011. "Evaluating retail banking quality service and convenience with MCDA techniques: a case study at the bank branch level," Working Papers w201131, Banco de Portugal, Economics and Research Department.

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