Companies are more and more striving for sustainable development as it can bring operational benefits such as cost savings and waste reduction. As product innovation contributes to sustainability mostly in its environmental dimension (Chou et al., 2015; Djellal and Gallouj, 2016), services can deliver companies' sustainability values in a more comprehensive way (Chou et al., 2015; Saviano et al., 2017). Services can offer actual business value by increasing sales from products, building customer loyalty, enhancing profits, and maintaining a competitive advantage to companies (Shelton, 2009). In addition, services provide genuine opportunities to implement the two other dimensions of sustainable development, social sustainability and environmental sustainability (Chou et al., 2015).
The increase of digitalization has authorized novel, more socially, environmentally and economically influential services to burt into sight. Digitality allows resource-efficient services by providing for example connectivity and transparency. The most important advantage of using digital resources is their capability to create value in novel ways or to enhance the effectiveness of existing methods. This has resulted in the rise of research on digital service innovation that refers to digitally enabled new products, services, and business processes, which leads to novel value creation and competitive advantages to the companies.
Despite the growing interest and research, further research is needed whether service innovation and sustainability are linked (Ostrom et al., 2015; Holmlund et al., 2016; Saviano et al., 2017) especially in digital context. Thus, as the continuance of fast development of digital service innovation, there is a need to investigate the effects they have created, especially in terms of sustainability.
This study investigates if digital service innovation contribute to sustainable business among small companies. The study builds on the analysis of a survey of Finnish small businesses. The survey was aimed at collecting data on the managerial assessments of digital service innovation, and the dimensions of sustainable business. We examined digital service innovation through three dimensions: increasing digitality in products, services, and business processes. A multidimensional view of sustainable business was adopted by considering economic, social, and environmental sustainability. All of the scales were based on previous research and modified for this study through a pre-test in collaboration with experienced researchers. Statistical analyses were utilized to test the hypotheses.
The results show that digital service innovation contributes to the sustainable business of small companies. The role of digital service innovation is the most remarkable in economic sustainability, whereas the role of digital service innovation in social and environmental sustainability is not as straightforward. The results offer an interesting contribution to the digital service innovation literature: we consider digital service innovation as an enable of sustainable business, and investigate organizational factors under which the digital service innovation is the most influential.