Managing distal searches and its diminishing returns to service solution provision competence

Professional service firms (PSFs) offer knowledge intensive business services in the form of service solutions. The provision of service solutions is challenging for PSFs because of the innovative and customised nature of their services. To examine how PSFs address the challenge of creating service solutions that satisfy customers’ needs, we examine distal knowledge search effect on their service solution provision competence (SSP competence) and impact of the level of strategic flexibility and employee collaboration on SSP competence. We show that distal knowledge search by PSFs at low or high level has a diminishing return to their SSP competence. Further, being strategically flexible with knowledge resources is beneficial in driving the PSFs’ SSP competence to achieve stronger customer satisfaction outcomes. However, employee collaboration does not foster the effect of distal knowledge search on SSP competence.