This study empirically demonstrates the impact of service innovation on innovation performance for manufacturing and service firms and finds that the effect of service innovation on innovation performance is greater for service firms than manufacturing firms. In addition, the results show that the relationship between the propensity for service innovation and three types of collaboration (vertical, horizontal, and third‐party collaboration) is significant. Furthermore, this study finds that vertical and third‐party collaborations are more beneficial than horizontal collaboration for service firms. This research advances the discourse on service innovation in two ways. First, it offers a stronger justification for examining and fostering innovation generation in service industries. Second, the findings regarding the comparative impact of collaboration highlight the desirability of stronger collaborations with channel members (whose interests are aligned with the firm) and neutral entities (whose interests are not in conflict with the firm) than with competitors (whose interests are likely not aligned with the focal firm). In short, the research presents a detailed and nuanced view of the antecedents and consequences of service innovation.
