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Frontline knowledge networks in open collaboration models for service innovations

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Abstract

Service organizations often view customer-facing or frontline employees (FLEs) as sources of inimitable knowledge valuable for innovation. This is due to the experiential nature of service and subtle qualities of engaging customer interactions. Yet, organizations face significant challenges while leveraging the knowledge of their FLEs to develop service innovations. Drawing upon the open innovation and social network literatures, we theorize the role of FLE networks, and the degree to which these networks enable the flow of distinct content for realizing effective service innovation. Specifically, we conceptualize a taxonomy of network domains—connecting customer- and internal-facing employees, and resource flows—new knowledge and self-governance activities, to provide a framework for FLE roles in knowledge networks for service-innovation. Our taxonomy expands opportunities for theorizing the mechanisms of frontline knowledge networks in service innovation as well as identifying a “dark side” that undermines potential innovation gains if left unchecked. Future directions and implications for theory and practice are discussed.

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Notes

  1. Alon, A., Elron, D., & Jackson, L. (2016). Accenture 2015 US Innovation Survey. Retrieved from https://www.accenture.com/t20160318T171433__w__/us-en/_acnmedia/PDF-10/Accenture-Innovation-Research-ExecSummary.pdf

  2. Barton, C., Koslow, L., Dhar, R., Chadwick, S., & Reeves, M. (2016). Building a Better Customer Insight Capability. Retrieved from https://www.bcg.com/publications/2016/center-customer-insight-growth-building-better-ci-capability.aspx

  3. Barton, C. (2018). Rewiring Customer Insight to Generate Growth. Retrieved from https://www.bcg.com/capabilities/marketing-sales/center-customer-insight/rewiring-customer-insight-generate-growth.aspx

  4. Organizational Frontlines research in Marketing has been defined as “the study of interactions and interfaces at the point of contact between an organization and its customers that promote, facilitate, or enable value creation and exchange” (Singh et al. 2017, p. 2). FLEs feature prominently in the frontline activities of service organizations.

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Funding

This work is supported by the Australian Government Research Training Program Scholarship.

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Correspondence to Ozlem Ozkok.

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This paper is based on a submission that was recognized as a winner of the 2017 AMS Review/Sheth Foundation Doctoral Competition for Conceptual Articles.

Appendix - Literature review - FLEs in open innovation and social networks research

Appendix - Literature review - FLEs in open innovation and social networks research

Authors

Broad research stream

Key theoretical contribution

Key empirical contributions

Key gaps identified

Hansen 2002

Social (Knowledge) Networks

Theorizes a knowledge network model to explain how the nature (connectedness) and degree (related/unrelated knowledge) of lateral inter-unit relations influence effective knowledge sharing and project completion.

Shorter network connections to units with related knowledge (joint effects) increase knowledge acquisition (.37/.06, p<.01).

The net effect of outdegree and non-codified knowledge has a negative effect on project completion time.

More inclusive knowledge network models that go beyond lateral relationships are needed to understand how network connectedness and knowledge flows (codified/uncodified) interact to influence knowledge and project outcomes.

Burt 2004

Social Networks

Conceptualizes structural holes (information holes between densely connected groups) as an antecedent to generating new ideas and employee job performance and promotions.

Brokerage (0.939, p<.001) and idea length (.0013, p<.05) have a significant impact on idea discussion. Further, managers with networks who do not span structural holes had low idea value (.694, p<.001, high dismissal of ideas (.972; p<.001), and have fewer ideas (2.356, p<.001).

Ideas were generated as different social groups were integrated but the idea spread was an issue as whole networks stayed disparate in organizations. The need to investigate how whole networks (i.e., small worlds) work to diffuse ideas for innovations remains a fertile research area.

Cross and Cummings 2004

Social Networks

Theorizes that individuals spanning social boundaries will observe higher performance ratings in knowledge-intensive work due to access to diverse knowledge, and knowledge absorption in solving complex problems.

Consultants with ties to internal-facing employees outside and inside the organization (p<.01), high betweenness centrality (awareness network position) (p<.05), and high flow betweenness (information network position) (p<.05) had high performance ratings.

Network characteristics and boundary spanning ties and positions are relevant factors in knowledge intensive networks. The need to adopt a whole network perspective to study organizational innovativeness requires further attention.

Inkpen and Tsang 2005

Social Networks

Theorizes a network typology of horizontal and vertical networks that span from a structured to unstructured dimension. Inter-organizational networks are conceptualized as having structural, cognitive, and relational dimensions that facilitate knowledge transfer.

N/A

Inter-organizational network types that permit knowledge spillovers and transfers may be impacted by different conditions and mechanisms such as shared goals in an intra-corporate network vs. goal clarity in a strategic alliance.

Lam, Kraus, and Ahearne 2010

Social Networks

Theorizes top-down frontline learning by positing that individual-level market orientation (IMO) diffuses to frontline-level through formal channels (mid-managers) and informal channels (social learning through expert peers). Additionally, sales district network size could hinder IMO diffusion from top-level managers and experts to frontlines.

Sales directors’ IMO has a positive effect on sales managers’ IMO (.16, p=.01) and expert peers’ IMO (.11, p < .05). In turn, expert peers’ and managers’ IMO have a positive effect on sales representatives’ IMO respectively (35. p<.01; .17, p<.01). When size of a sales network district size is larger, the effect of expert peers’ IMO on sales representatives’ IMO diminishes (-.05, p<.01).

Formal top-down learning in organizations is extensively researched; informal market-driven learning from expert peers to frontline require further attention. Social learning within groups are key for frontline learning. Dynamic and informal networks and their characteristics can complicate theorizing about FLE networks.

Lusch, Vargo, and Tanniru 2010

Social Networks

(S-D Logic view and Value Networks Perspective)

Theorizes supply chains as service ecosystems that employ value networks. These networks are tied through information technology and business relations. Thus, value is co-created by customer in networks by knowledge exchange and governance of supply chain (service) activities which improves learning to serve in a value network.

N/A

Market and hierarchical governance have been researched extensively, however little is known about the governance of networks. A governance approach to better understand how social norms, network positions and characteristics predict learning requires further investigation.

Marrone 2010

Open Innovation

Theorizes about (1) team boundary spanning (a) antecedents include leadership, team characteristics and structure, (b) contextual antecedents such as environmental certainty and team resources (c) outcomes including team innovativeness; (2) network-level boundary spanning which is defined by having inter-team and external unit boundary spanning activities that could help innovation and performance outcomes triggered by leadership influence.

N/A

Conceptual and empirical research are scarce in a) mediating mechanisms of (whole) network-level boundary spanning activities and innovation area (b) team-level boundary spanning activities and moderating variables.

Tortoriello and Krackhardt 2010

Social Networks

Boundary spanners’ bridging ties are conceptualized to have different micro-structures that generate individual innovativeness. Specifically, Simmelian ties are embedded in cliques and improve innovativeness via agreement creating forces, stability and increased cooperation.

Individual innovativeness is negatively associated with high number of Simmelian ties due to accessing redundant information which impedes creativity. However bridging Simmelian ties increases innovativeness (p < .01). Strong or weak bridging ties have positive but non-significant associations with innovativeness.

Mixed findings in strong and weak ties research call for further examination of networks’ structural characteristics which may have a confounding effect on network structure and innovation relationship.

Reinholt, Pedersen, and Foss 2011

Social (Knowledge) Networks

Theorizes a motivation-opportunity-ability framework to explain why open (egocentric) networks may overcome its limitations of diffused trust and dispersed reciprocity to enhance knowledge sharing and acquisition.

Significant effects of 3-way interaction among between autonomous motivation, network centrality and knowledge sharing ability on knowledge acquisition (.1, p<.001). Moreover, motivation to share knowledge positively moderates the association between knowledge acquisition and network centrality (0.9, p < 05).

Individual difference variables explain variation in the degree to which knowledge is shared and transferred, but issues of the quality of knowledge shared and the learning it entails are not examined.

Lages and Piercy 2012

Open Innovation

Theorizes about drivers of employee generation of ideas for service improvement (GISI). Key antecedents including employee perceived organizational support, reading of customer needs, job satisfaction and employee affective organization commitment directly influence GISI.

Reading customer needs (.54, p<.01), affective organizational commitment (.16, p<.05), and job satisfaction (.26, p<.01) facilitate idea generation for frontlines.

As FLEs are embedded in customer networks, it is important to note what amplifies and impedes knowledge flows, Customers and FLEs as domains of knowledge flows represent rich opportunities for future research.

Ye, Marinova, and Singh 2012

Open Innovation

Frontline knowledge is key to organization learning because it is developed from or created during customer interactions and is rich with insights for navigating productivity-quality tradeoffs but remains untapped. Theorizes a frontline knowledge mechanism for extracting value to improve service efficiency and customer satisfaction.

Frontline knowledge articulation fully mediates the relationship between knowledge generation and knowledge updating. When frontline knowledge mechanism is functional, it significantly increases service efficiency (.13), customer satisfaction (.12), and revenue (.03) (all p < .01).

Harnessing frontline knowledge for organizational outcomes requires mobilization of frontline networks for effective articulation.

Forte 2013

Open Innovation

(Open Collaboration)

Theorizes about Open Collaboration (OC) characteristics: 1) Participants work towards a goal 2) Self-organizing communities such as Open Source Software projects or peer production platforms represent good examples of OC 3) Social relations are persistent and permit negotiation of social norms.

Findings from varied literature are present, but a key and common finding is: Diverse motivations and social mechanisms exist for voluntary knowledge flows.

Different domains of human activity present for OC. The need to discover dynamic social mechanisms that lead to producing new knowledge requires further investigation.

Levine and Prietula 2013

Open Innovation

Theorizes the nature of “open collaboration” organization as (a) goal-focused (create value), (b) open access (contribute/consume), (c) networked (interaction/ exchange) and (d) loosely coupled (coordination/control). Also theorizes performance benefits of open collaboration organizations.

Simulations of a random population with (a) 13% cooperators, (b) 63% reciprocators, (c) 20% free riders, and (d) 4% inconsistent participants show open collaboration improves performance, but this improvement occurs at a decreasing rate with increasing “cooperators.”

Reciprocity and diversity are key mechanisms that require further development in open collaboration networks.

Love, Roper, and Bryson 2011

Open Innovation

Theorizes about innovation value chain in three phases – knowledge sourcing, transforming, and exploiting. Furthermore, the linkages throughout the value chain are formed by exploratory, encoding, and exploitative linkages to external knowledge sources.

As for exploratory linkages, firms use of customers (27.935, p <.01) and internal networks with multi-functional teams (.223, p<.01) impact firms’ knowledge sourcing activities. As for encoding linkages, public and private research organizations facilitate knowledge transformation from external sources (29.287, p < .01).

Firm external environments and knowledge activities play a key role in translating resources into business value, however, more longitudinal research is needed to understand causal linkages of knowledge processes in open collaborative networks.

Gonzalez, Claro, and Palmatier 2014

Social Networks

Theorizes about how Relationship Managers’ formal and informal networks impact RM’s performance. Social capital sources (structures and relations) are posited to improve social capital benefits including information access and cooperation. Cross-level networks (informal and formal) can enhance RM’s performance – defined as “cross-level” network synergy.

Density of formal and informal networks have positive effects on performance (.24, p<.05; .37, p<.01). Moderating effects are found for brokerage of 1) informal networks and density of formal networks (.24, p<.05), 2) formal network overlap (.38, p<.05), and 3) informal network density and network overlap (.56, p<.01)

Social capital derived from intertwined networks can be crucial for frontline performance. Studies that test whole-network level effects, specifically different networks such as advice or mentorship where different knowledge flows may impact FLEs require further attention.

Mina, Bascavusoglu-Moreau, and Hughes 2014

Open Innovation

Theorizes differentiating features of service and manufacturing firms in open service innovation. Service firms are posited to rely heavily on external knowledge and non-R&D sources. They also co-create with customers more frequently. Drivers of open innovation in business services firms are often informal governance choices such as mutual trust, relationships, and/or less contractual solutions.

For manufacturing and service firms, firm size (.008, p<.1) and R&D expenditure (.02, p<.01) are related to engagement with open innovation activities. Service firms utilize informal knowledge exchange activities more than formal (.2, p<.01) as they engage with open innovation activities.

Open services innovation has been neglected by open innovation research stream. An in-depth understanding of open innovation behaviors of the service firms helps discover how open innovation enables organization outcomes and performance.

Bolander, Satornino. Hughes, and Ferris 2015

Social Networks

Theorizes that network positions of sales employees lead to knowledge flows. In fact, network centrality differs when a salesperson possesses power through reputational resources derived from access to powerful others versus informational resources derived from access to unique information.

Salesperson network characteristics (i.e., relational centrality and positional centrality) improve salesperson performance (.262, p = .000; .209, p = .000, respectively).

While political skills may drive relational centrality, it is not quite clear what drives positional centrality in networks. Further investigation for antecedents of network characteristics that impact flows would be useful.

Bogers, Foss, and Lyngsie 2018

Open Innovation

Theorizes about micro-foundations of open innovation such that employee roles and characteristics play an important role in how and to what extent firms utilize external knowledge.

Innovative leadership of employees is associated with firm-level openness (.05, p<.001). Educational Diversity of employees positively affects firm-level openness (.19, p<.05). Interaction effect of educational diversity and work history on openness (.18, p < .05).

Study looks at two types of employee diversity as micro-foundations of open innovation to understand how knowledge heterogeneity employs firm openness to external knowledge use. The mechanisms and performance of open innovation remain unobserved.

Hartmann, Wieland, and Vargo 2017

Social Networks

(Service Ecosystem Perspective)

Theorizes salespeople in a service ecosystem and defines selling actors as people who dynamically interact and exchange resources through service-for-service exchange. Actors in the ecosystem form ties and relationships which facilitate flow of information. As a result, they co-create value through the institutional arrangements via crossing points and service ecosystem interactions. Often systematic interactions adopt and change collectively for institutionalized innovations.

N/A

As a research priority, the authors suggest a social network lens to understand what service ecosystem tasks for emergent decision activities, and what technologies will evolve and develop as the number of crossing points for multiple actors increase.

Santos-Vijande, Lopez-Sanchez, and Rudd 2016

Open Innovation

FLE co-creation involves collaboration with internal R&D teams to launch and market new service developments (NSDs). FLE co-creation enhances NSD market performance through FLE and customer outcomes as well as NSD speed and quality.

Some key findings for FLEs and customers: FLE co-creation directly affects FLE outcomes (2.074, p<.05) but does not significantly impact customer outcomes. FLE outcomes improve customer outcomes (4.355, p<.01) and in turn that positively affects NSD Market Performance (2.297, p<.05).

Co-creation which involves purposeful knowledge flows from internal- and external-facing, employees, holds complex and inherent challenges. The area research is scarce and could benefit from further research.

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Ozkok, O., Bell, S.J., Singh, J. et al. Frontline knowledge networks in open collaboration models for service innovations. AMS Rev 9, 268–288 (2019). https://doi.org/10.1007/s13162-018-00133-5

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