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Introduction
Firm managers place different emphases on strategic behaviors and select strategic orientations dependent upon what they wish to accomplish ([59] Olson et al. , 2005). For example, firms with a strong customer orientation emphasize the creation and maintenance of customer value. More competitor-oriented firms encourage in-depth assessment of targeted competitors and cost-oriented firms pursue efficiency throughout their value chain ([22] Day, 1990; [64] Porter, 1985). The different types of strategic orientations are not mutually exclusive; firms commonly engage in multiple sets of behaviors at the same time ([33] Gatignon and Xuereb, 1997).
Strategic orientations are aspects of corporate culture ([25] Deshpande et al. , 1993; [45] Hurley and Hult, 1998; [57] Narver and Slater, 1990). Corporate or organizational culture represents intangible resources for firms ([5] Barney, 1991; [35] Grant, 1991). The deployment of those resources, i.e. orientations, will have different relative impacts ([23] Day, 1994). Strategic orientation focuses resources to achieve desired outcomes. In the current context, we examine how resources impact one type of capability development - service innovation.
Innovation has been empirically linked with superior performance ([18] Damanpour and Evan, 1984; [49] Khan and Manopichetwattana, 1989). However, while much of the previous research has centered on product innovation, our research focuses on service innovation. Service innovation is a "hot topic" warranting greater attention ([9] Berry et al. , 2006). Service innovation represents an additional means by which firms can improve their market performance and efficiency ([13] Chapman et al. , 2003), which in turn may contribute to competitive advantages in today's business environment. Many firms elect to compete on the basis of service rather than on physical products ([38] Gronroos, 2000; [47] Kandampully, 2002).
We will propose and empirically test a conceptual model linking strategic orientation, service innovation, and market performance. In the next sections, relevant literature is reviewed and a theoretical framework is introduced along with research hypotheses. This is followed by research methodology and analysis. Managerial implications, study limitations, and research opportunities are then discussed.
Background
Innovation
Innovation plays a critical role in the increasingly competitive business environment in which firms operate. As a result, researchers have provided insights as to how firms innovate and how innovations spread to other firms and individuals ([19] Damanpour, 1991). However, much of the...