SERVICE INNOVATION AND FIRM PERFORMANCE

Abstract

Although it is known that service quality has a significant impact on service innovation and firm performance. There is a lack of empirical research which examines a triangulation of service quality, service innovation and firm performance regarding logistic firms in Malaysia, with prior research nevertheless mainly analysing these paradigms either in a two-way relationship or discretely. The aim of this paper is to investigate the relationship between service quality, service innovation and firm performance in the Malaysia logistic industry. The direct relationship between service quality and firm performance outperforms the indirect relationship of service innovation and firm performance. It has contributed in the sense that past researchers have not considered the tri-dimensional relationship between service quality, service innovation and firm performance. An empirical survey was performed and there were 190 participants from logistic industry in Malaysia. Regression analysis was employed in this study to investigate the relationship between service innovation and firm performance.  PLS-SEM was performed to analyse the data, and the results confirmed that there is a relationship between service innovation and firm performance. Using structural equations modelling, we found that service innovation is significantly related to firm performance. Practical implications – The understanding of innovation in services allows managers to better design their service offerings and formulates corresponding operational strategies around customer needs. Originality/value – This paper examines the service innovation of the logistic companies and is an excellent tool for managers deciding on which innovations to implement.