A Hierarchy of Value in the Adoption of Radical Service Innovations: Evidence From Wellness Hospitality

This article investigates the operational challenges of launching radical service innovations (RSI) in the hospitality industry. While RSI is a primary driver of competitive advantage, the operations management literature has largely focused on incremental innovations. We address this gap by examining the innovation window , the critical post-implementation phase where a firm introduces a radical value proposition (the wellness-centric guest room) that conflicts with established operational routines. Using a unique data set of matched reservation and survey records from a major destination hotel during its RSI launch (2014–2015), we employ Heckman correction and quantile regression to disentangle the effects of extrinsic (process efficiency), intrinsic (experiential emotion), and systemic (economic value) drivers on guest satisfaction. Our results reveal a hierarchy of value in radical innovation adoption: We find that operational efficiency in the check-in process acts as a gatekeeper, as it functions as an educational mechanism that reduces technology anxiety and enables customer co-creation. Without this operational competence ( extrinsic value), guests fail to unlock the higher-order emotional benefits ( intrinsic value) of the innovation. Furthermore, we find evidence that for lower-satisfaction guests, value is driven primarily by systemic economic factors, whereas high-satisfaction guests are driven by intrinsic wellness experiences. We conclude that successful RSI requires a servitization strategy where high-tech amenities are supported by high-touch operational education.