Engagement Capability, Innovation Intensity and Firm Performance: The Role of Competitive Intensity

Abstract

This study assesses how service firms’ engagement capability enhances their value creation advantages. We analyze how the development of engagement capability helps service firms to create innovation advantages and enhance firm performance. The study also evaluates the moderating effect of competitive intensity on the relationship between engagement capability and firm performance. We collected data from the service sectors from an emerging African economy, Ghana. The validity and the reliability of the constructs were confirmed through a confirmatory factor analysis. We then assessed our hypothesized relationships through robust standard error hierarchical regression. The results show that developing and deploying customer engagement capability by firms produces positive effects on both innovation intensity and firm performance. The study also finds that competitive intensity as a market condition serves as a boundary condition and therefore moderate the relationship between customer engagement and firm performance. A useful implication from this study is that, inasmuch as service firms must encourage customer engagement and participation in the value creation process, firms must also be mindful of their capacity to meet the engagement requirements for effective value co-creation of the market conditions under which they currently operate.

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