| The proportion of Knowledge-Intensive Business Service(KIBS) in national economy has been regarded as a key index for national economical development. Enhancing service innovation capability in KIBS helps increase its knowledge bridging role in innovation system. However, very little research has taken a micro perspective to explore how KIBS improves its service innovation capability. The current study aims to investigate the underlying mechanism of service innovation capability enhancement in KIBS from the angle of network relationship and capability key factor, which can extend our knowledge base and provide valuable practical suggestions.The inadequacy of resources needed for innovation leads to low service innovation capability in many KIBS. Since the inner resources no longer meet the development of service innovation, more and more KIBS rely on network to obtain essential external resources. Business network sheds lights on a new research direction in examining service innovation, which focuses primarily on obtaining the external knowledge mobilized among businesses. Network contains various types of knowledge, through which KIBS may attain necessary knowledge to improve innovation thus increase innovation performance. Therefore a series of questions arises: how to define service innovation capability? What are the essential components and how to evaluate it? Can network relationship help enhance service innovation capability in KIBS? Can network relationship cast direct effect on service innovation performance? What is the relationship between service innovation capability and service innovation performance? Focused on"network relationship and service innovation", the current study examines the underlying mechanism of how network relationship influences service innovation capability, and explores how KIBS enhances its service innovation capability via network relationship construction. The main findings are:1. With an emphasis on KIBS, the current study provided a thorough discussion on the definition of service innovation and essential components of service innovation capability. Furthermore, employing a grading system to assess the service innovation capability of KIBS, the current study evaluated service innovation capability of KIBS from five perspectives: research and development capability, marketing capability, service realization capability, progress and growth capability, and organizing and management capability. These findings help further our theoretical understanding of service innovation, and provide an evaluation framework for KIBS to evaluate its service innovation capability.2. Exploring the underlying mechanism of service innovation enhancement and service innovation performance from the perspective of network relationship, the current study constructed a concept model to assess the impact of network relationship on service innovation capability. The present study employed an empirical methodology to validate the hypothesis of network relationship and service innovation capability, the relationship between network relationship and service innovation capability and the relationship between knowledge transfer and service innovation capability.3. Data were collected through a self-developed questionnaire, and analyzed using statistic tools such as variance analysis, factor analysis, correlation analysis, and Structural Equation Modeling (SEM). The results validated the underlying mechanism of network relationship, knowledge transfer and service innovation capability on service innovation performance, and the impact of network relationship and knowledge transfer on service innovation capability. In addition, the current study explored the path among network relationship, knowledge transfer, service innovation capability and service innovation performance. The findings from the study provide a critical framework for KIBS to enhance service innovation capability which in turn will improve its service innovation performance.
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