When is entrepreneurship good? The effects of information asymmetry and producer/consumer interface on innovation in service industries.

摘要

Much of the extant literature examining corporate entrepreneurship suggests that firms should strive to engage in high levels of innovation in order to maximize firm performance. This study further investigates the role of innovation in achieving and sustaining a competitive advantage. Using both transaction cost analysis and the resource-based view of competitive advantage as theoretical underpinnings, this study suggests that a service firm's level of innovation is affected by the level of both information asymmetry and consumer/producer interface (CPI) in the firm's environment. In addition, using a contingency argument I posit that the correct “fit” between these environmental variables and a service firm's level of innovation will result in superior firm performance. Hypotheses were tested through the use of surveys collected from service firm CEOs, and data were analyzed using hierarchical regression analysis. Results suggest that while information asymmetry does not appear to affect innovation strategies, high levels of CPI create switching costs that allow service firms to benefit from high levels of innovation of both the services they offer and the methods utilized to deliver those services. Conversely, results also support the suggestion that service firms are less like to engage in new geographic market innovation when levels of CPI are higher, as they strive to remain in close proximity to their customers and in this case less geographic market innovation results in superior performance. Implications for theory and research conclude the manuscript.