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The purpose of this thesis is to understand the phenomenon of digital service innovation in the context of emerging markets – environments which are characterized by severe constraints. So far, literature on constraint-based innovation in emerging markets is primarily concerned with innovations related to new tangible products that are low-priced, yet of good quality to create value for the low-income customers. As a result, little is known about the innovation processes that are inherent in the development and implementation of new services in constrained environments. To address this severe research gap, this thesis integrates insights from existing innovation literature on emerging markets and literature on service innovation, which so far, is predominantly conducted in the developed market context. More specifically, this study adopts the service-dominant logic to shed light on the service innovation activities and practices local innovators performed to develop and implement new services. Departing from this view, the focus is on specialized competences, such as knowledge and skills (intangible resources) that are applied through activities, practices, processes and performances to create beneficial value for the local user. Based on the examination of six digital service innovations in the transportation sector in three sub-Saharan African economies (Kenya, Nigeria and Rwanda), this study identifies various activities and practices performed to develop and implement new digital services. This thesis suggests six service innovation practices, organized in two main practice categories that were foundational for creating value in constrained environments. These two overarching practices comprised platform-based and integrational practices, which are labeled as “leveraging digital platform capabilities” and “integrating into socio-cultural context”. Furthermore, analyzing the interplay between the complexity of constraints, practices and value creation has unveiled a specific innovation capability, denoted as designing for multidimensional value. Overall, this thesis makes three key theoretical contributions on the debate on innovation practices and capabilities relevant for emerging markets. First, this study provides a refined understanding of contextual constraints pertinent in emerging markets, by elucidating the low level of trust as a major obstacle for building effective service exchange relationships. More specifically, the study suggests the explicit incorporation of trust into the theorization of digital service innovation in institutionally deficient environments due to its capacity to intermediate transactions. Second, the foundational role of digital platforms is highlighted. Platforms were ound to be important generative instruments in resource-constrained environments, as they drive resource accumulation and resource generation. Furthermore, digital platforms were helpful to provide structure and organization for service exchange processes among a variety of actors. Third, in view of the complexity of problems and the unpredictability of the local business environment, this thesis highlights the role of a design-centered approach to service development. More specifically, the capability of designing for multidimensional value is considered a vital competence to create valuable solutions for the emerging market context and to address wicked problems. In sum, this thesis concludes that digital service innovation provides tremendous potential for young emerging market economies but needs to be developed and implemented in congruency to the resources, institutions, trust levels and capacities of the local users and the social system.

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