Because of increasing importance of service, rapid product (service) life cycles, and serious competition among firms, an expanded view of service innovation is needed. Our study used concepts from contingency theory to examine the mediating effects of customer participation on entrepreneurial orientation and service innovation, as well as investigating the moderating effect of innovativeness of employee (IOE) and information technology (IT). A field survey was conducted within 49 Taiwanese firms from wholesale and retail industry; we found that companies interviewed emphasized customer participation but used traditional ways to interact with customers, such as phone and tax, and this may lead to the small amount of service innovation projects and low frequency of interaction. We concluded that managers should mobilize new ways of interaction that require new information technology or mechanism, such as online interaction and brainstorming, to achieve service innovation. Furthermore, using IT to sense customers’ needs in the new service development (NSD) process is crucial in enhancing e-service innovation. We discuss the theoretical and managerial implications of the findings and conclude with comments on limitations in our study.

Because of increasing importance of service, rapid product (service) life cycles, and serious competition among firms, an expanded view of service innovation is needed. Our study used concepts from contingency theory to examine the mediating effects of customer participation on entrepreneurial orientation and service innovation, as well as investigating the moderating effect of innovativeness of employee (IOE) and information technology (IT). A field survey was conducted within 49 Taiwanese firms from wholesale and retail industry; we found that companies interviewed emphasized customer participation but used traditional ways to interact with customers, such as phone and tax, and this may lead to the small amount of service innovation projects and low frequency of interaction. We concluded that managers should mobilize new ways of interaction that require new information technology or mechanism, such as online interaction and brainstorming, to achieve service innovation. Furthermore, using IT to sense customers’ needs in the new service development (NSD) process is crucial in enhancing e-service innovation. We discuss the theoretical and managerial implications of the findings and conclude with comments on limitations in our study.

ABSTRACT i
TABLE OF CONTENT ii
LIST OF FIGURES iii
LIST OF TABLES iv
CHAPTER 1. INTRODUCTION AND RESEARCH QUESTION PURPOSE 1
CHAPTER 2. THEORATICAL FOUNDATION 3
2.1 Contingency theory 3
2.2 Customer participation 4
2.3 Innovativeness of employee (IOE) 5
2.4 Information Technology 6
CHAPTER 3. METHODOLOGY AND ANALYSIS 8
3.1 Sample Statistics 10
3.2 Descriptive Analysis 11
3.3 Correlation 19
3.4 Path analysis 20
CHAPTER 4 Conclusion 21
References 23

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