Innovation practices of B2B manufacturers and service providers: Are they really different?

Abstract Service innovation is of critical importance for western economies. But, in sharp contrast with product innovation, the service innovation literature is fragmented and it is not clear to what extent B2B service innovation differs from B2B product innovation. This article contributes to this ongoing debate by analyzing the innovation practices of 372 B2B product manufacturers and service providers. The findings show that, compared to B2B products-focused firms, B2B services-focused firms are overall less sophisticated in their innovation practices: they manage less explicitly for innovation, have lower innovation expectations, favor incremental innovation and, when they do initiate more innovative or radical projects, they spend less time taking them to market. Nevertheless, they have innovation outcomes that are equivalent to products-focused firms. This study also acknowledges the reality that the vast majority of B2B firms actually offer product-service hybrid offerings to their customers. It shows that most B2B firms offer both products and services to customers, and that mixed product strategy firms with 75% products (services) and 25% services (products) are most committed to innovation. Therefore, firms need to simultaneously develop both new products and related services and are looking for the concepts and tools to effectively do so.