New service development: areas for exploitation and exploration

The management of new service development (NSD) has become an important competitive concern in many service industries. However, NSD remains among the least studied and understood topics in the service management literature, As a result, our current understanding of the critical resources and activities to develop new services is inadequate given NSD's importance as a service competitiveness driver. Until recently, the generally accepted principle behind NSD was that "new services happen" rather than occurring through formal development processes. Recent efforts to address this debate have been inconclusive. Thus, additional research is needed to validate or discredit the belief that new services happen as a result of intuition, flair, and luck. Relying upon the general distinctions between research exploitation and exploration, this paper describes areas in NSD research that deserve further leveraging and refinement (i.e. exploitation) and identifies areas requiring discovery or new study (i.e. exploration). We discuss the critical substantive and research design issues facing NSD scholars such as defining new services, choice in focusing on the NSD process or performance (or both), and specification of unit of analysis. We also examine what can be exploited from the study of new product development to further understanding of NSD. Finally, we explore one important area for future NSD research exploration: the impact of the Internet on the design and development of services. We offer research opportunities and research challenges in the study of NSD throughout the paper. (C) 2002 Elsevier Science B.V. All rights reserved.