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Despite the importance of service innovation, its effects have been given relatively little explicit attention in the extant literature. Instead, researchers often implicitly assume that firm-level service innovation activities result in a number of positive financial and other effects. This paper conducts a systematic review of literature on the firm-level effects of service innovation and attempts to identify and categorize the effects suggested in the literature. The review reveals a considerable number of potential firm-level service innovation effects that have been discussed in extant research. We suggest that they may be divided into five effect categories: (1) business process effects, (2) capability effects, (3) relationship effects, (4) financial performance effects and (5) competitiveness effects. The findings suggest directions for further research that aims to develop a causal model of service innovation effects.
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