Value innovation in business markets: Breaking the industry recipe

The industrial marketing as well as the strategic management literature stresses the importance of "value innovation" in order to create/sustain competitive advantage and to rejuvenate the organization. In the first part of this article the construct of value innovation is operationalized within the context of selected business-to-business markets. We report the results of an ongoing research project; starting from traditional ways of value creation, the study reveals different types of value innovation initiatives undertaken by industry participants. We observe, however, that networks, firms and managers are embedded in industry recipes. These recipes block the creation and realization of value innovation. Some firms are trying to break out of existing frames and their experiences pinpoint to specific ways of markets sensing, strategic marketing and different marketing-mix tools. As such, the research frames value innovation initiatives in the existing industry contexts and managerial frames, and identifies drivers, barriers and perceived success factors for the process of value innovation. The second part of the article then looks at the stages of value innovation and their impact on marketing, organizations and networks. Based on the data analysis, the paper posits propositions which stress the concept of "multilevel absorptive capacity". (c) 2005 Elsevier Inc. All rights reserved.