Influence of information technology capability on service innovation in manufacturing firms

Purpose This paper aims to explore the influence of information technology (IT) capability (i.e. IT exploration and exploitation) on service innovation and ultimately financial performance in manufacturing firms. Moreover, this paper examines the contingent role of cross-functional integration (CFI) on the IT capability–service innovation relationship. Design/methodology/approach This study employs seemingly unrelated regression to test the theoretical model based on survey data from 121 manufacturers in China. Findings IT exploration is positively related to radical and incremental service innovations, whereas IT exploitation is only positively related to radical service innovation. CFI positively moderates the relationship between IT exploitation and service innovation. Radical and incremental service innovations are positively related to manufacturers' financial performance. Originality/value This study contributes to existing information systems and servitization literature by uncovering the varying effects of IT exploration and exploitation on radical and incremental service innovations and by revealing the different contingent roles of CFI in moderating the above effects in the manufacturing context.