Process reference frameworks as institutional arrangements for digital service innovation

Information systems (IS) service organizations are increasingly more concerned with their ability to co-create digital services with customers in service ecosystems. Practitioners and researchers, however, lack understanding of which organization mechanisms effectively contribute to IS organizations’ innovation practices. Grounded in service-dominant logic, we hypothesized that process reference frameworks (PRFs), such as the IT Infrastructure Library (ITIL), act as institutional arrangements through their norms, rules, and practices, enhancing IS organizations’ ability to innovate digital services. Data collected from 159 IS organizations confirmed our hypotheses, showing that effects on digital service innovation are mediated by an organization’s digital service climate and co-creation practices. This study makes four major contributions. First, our results contribute to the literature on service-dominant logic and the role of institutional arrangements in facilitating service innovation in service ecosystems. Second, our study offers a novel understanding of PRFs’ role in value co-creation and digital service innovation. Third, by introducing the digital service climate from existing theoretical frameworks that might assist in conceptualizing the role of culture and shared meaning, our study contributes to further theorizing on the social factors that influence service ecosystem practices. Finally, our findings can motivate IT managers to consider using PRFs to develop capabilities for creating business value together with customers.