Organizational Innovation as a Double-Edged Sword for Service Innovation: Evidence From Korean Service Firms

Organizational innovation is increasingly important to service innovation, yet its enabling and constraining implications remain insufficiently understood. Using firm-level data on 4,000 Korean service firms from the 2023 Korean Innovation Survey, this study examines the association between organizational innovation and service innovation and develops a double-edged framework distinguishing opportunity expansion from capability requirements. Logit models with industry-clustered standard errors show that organizational innovation is positively associated with service innovation, and the relationship remains robust to alternative measures, region and industry fixed effects, and exclusion of the potentially overlapping service-process item. Management control system and service delivery process innovation show particularly strong positive associations, whereas value-chain innovation is positive but more specification-sensitive. Negative-binomial results further show that organizational innovation is robustly associated with greater information-source diversity. It is also positively associated with perceived talent and information shortages in the main specifications, although these relationships weaken after fixed effects are introduced. The findings extend organizational innovation research to service firms and show that organizational change can be associated with broader innovation opportunities while simultaneously being accompanied by context-dependent resource pressures.