Identifying service innovation micro‑practices for value co‑creation in a cultural context

<p dir="ltr">Service innovation has received more attention in recent years and has moved from the edges of innovation literature to a strategic position of considerable prominence. As a result, service innovation has moved from the periphery to the forefront of innovation research, with scholars and practitioners devoting more attention to understanding its dynamics, drivers, and outcomes. This heightened interest in service innovation is motivated by the growing recognition that the design, development, and delivery of innovative, tailored services are essential for firms to stay competitive and to create joint value for their customers. Co-innovation is an increasingly popular strategic approach to developing new service offerings and disrupting the market. The process entails collaborating with multiple stakeholders by applying specific practices to co-create innovation outcomes (i.e., new products and services). Unlike products, services are highly contextual, and co-innovation studies to date have not theorised the role of the cultural context in shaping these practices. Cultural context shapes co-innovation practices through specific sharing norms and culturally aligned guidelines. Therefore, it is vital to understand the influence of cultural context on co-innovation practices that stakeholders use to collaborate with the firm. This study draws on institutional and practice theory to argue that the service co-innovation process is embedded in an institutional context comprising specific rules, norms and cultural frameworks. Such an institution-driven context leads to the manifestation of service co-innovation practices. Over time, such practices have become routine actions that legitimise a firm's co-innovation efforts to generate novel service ideas that meet context-specific customer needs. <br>This study used an exploratory research design to investigate the service co-innovation practices within a cultural context. Co-innovation follows a complex process where stakeholders enact various practices during their collaboration to co-create value; therefore, a qualitative research method was deemed the most appropriate for gaining the richness of data necessary for an in-depth analysis of socially interacting stakeholder groups collaborating within an Islamic bank. <br>The banking sector in an Islamic culture was chosen as the context for this study. Specifically, this context was chosen as this setting demands co-innovation practices to comply with Islamic banking institutional norms, with adherence monitored by the regulating actors, the sharia scholars (Cultural Compliance Champions). Data were collected via researcher observations of co-innovation practices during an Islamic bank's service innovation awareness seminars and focus groups. Multiple in-depth interviews were conducted with actors from the three primary stakeholder groups engaged in the service co-innovation process. <br>This research proposes a multi-stakeholder service co-innovation practice framework and further contributes to service innovation literature by conceptualising a typology of co-innovation practices within a culturally bound context, thus highlighting culture's importance in shaping co-innovation efforts. The research significantly advances our understanding regarding co-innovation practices in a culturally bounded context by conceptualising and theorising contextual co-innovation practices. It contributes valuable insights into how cultural norms, particularly those influenced by cultural context, impact the dynamics of co-innovation. Moreover, the research provides valuable theoretical implications for managing service innovation processes in cultural contexts. <br>Three distinct sets of cultural context-specific co-innovation practice categories were identified: firm-related practices (e.g., condensing, clarifying, upskilling and addressing common beliefs), customer-related practices (e.g., confiding, conforming and relating) and culture-related practices (e.g., seizing, approving and reinforcing contextual significance). Understanding the nuances of a cultural context in the co-innovation process can allow firms to co-create with users to develop institutionalised and culturally aligned service offerings to meet customer needs. Adopting a practice approach to optimising co-innovation and focusing on the practices that are enacted by triadic stakeholders are important for managers working in a culturally bounded institutional setting. Practices reflect the behavioural choices of customers when applied in culturally bounded contexts; thus, a practice approach will help managers design more customisable products and services. Thus, this study provides a framework for practitioners to shape better co-innovation programs that best align with contextual requirements.</p>