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Beyond complementarity: interactive and bounded effects of dynamic service innovation capabilities on firm performance

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  • Jun Zhan

    (Shanghai Maritime University, School of Economics & Management
    Fujian Jiangxia University, School of Foreign Languages
    Yunnan Normal University, School of Economics & Management)

  • Shun Zhang

    (Shanghai Maritime University, School of Economics & Management
    Cisco Systems (China) Research & Development Co., Ltd)

  • Silvana Trimi

    (University of Nebraska–Lincoln, Department of Supply Chain Management and Analytics)

  • Duong Thuy Pham

    (Vietnam National University, Hanoi School of Business and Management)

Abstract

This study examines how the five Dynamic Service Innovation Capabilities (DSICs) (sensing user needs, sensing technological options, conceptualizing, coproducing and orchestrating, and scaling and stretching) jointly impact on firm performance. Using survey data, from 318 small and medium-sized enterprises in the technology-intensive hub of Shanghai and its surrounding area of China, partial least squares structural equation modeling (PLS-SEM) was applied for analysis. The results confirm that DSICs have significant interactive (complementary and substitutional) and bounded (non-linear) effects on market and financial outcomes. The findings show DSICs indeed operate as an integrated capability system whose balance and optimal intensity determine firm performance. The study advances dynamic capabilities theory and offers managerial guidance for designing balanced service innovation portfolios.

Suggested Citation

  • Jun Zhan & Shun Zhang & Silvana Trimi & Duong Thuy Pham, 2025. "Beyond complementarity: interactive and bounded effects of dynamic service innovation capabilities on firm performance," Service Business, Springer;Pan-Pacific Business Association, vol. 19(4), pages 1-33, December.
    • Handle: RePEc:spr:svcbiz:v:19:y:2025:i:4:d:10.1007_s11628-025-00599-x
    DOI: 10.1007/s11628-025-00599-x
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