Contents lists available at ScienceDirect International Journal of Information Management journal homepage: www.elsevier.com/locate/ijinfomgt Process reference frameworks as institutional arrangements for digital service innovation Jon Iden a, *, Tom Roar Eikebrokk b , Mauricio Marrone c a Norwegian School of Economics, Helleveien 30, N-5045 Bergen, Norway b University of Agder, Norway c Macquarie University, Australia ARTICLE INFO Keywords: Digital service innovation Process reference framework ITIL Service-dominant logic Institutional arrangements ABSTRACT Information systems (IS) service organizations are increasingly more concerned with their ability to co-create digital services with customers in service ecosystems. Practitioners and researchers, however, lack under- standing of which organization mechanisms effectively contribute to IS organizations’ innovation practices. Grounded in service-dominant logic, we hypothesized that process reference frameworks (PRFs), such as the IT Infrastructure Library (ITIL), act as institutional arrangements through their norms, rules, and practices, en- hancing IS organizations’ ability to innovate digital services. Data collected from 159 IS organizations confirmed our hypotheses, showing that effects on digital service innovation are mediated by an organization’s digital service climate and co-creation practices. This study makes four major contributions. First, our results contribute to the literature on service-dominant logic and the role of institutional arrangements in facilitating service innovation in service ecosystems. Second, our study offers a novel understanding of PRFs’ role in value co- creation and digital service innovation. Third, by introducing the digital service climate from existing theoretical frameworks that might assist in conceptualizing the role of culture and shared meaning, our study contributes to further theorizing on the social factors that influence service ecosystem practices. Finally, our findings can motivate IT managers to consider using PRFs to develop capabilities for creating business value together with customers. 1. Introduction The widespread introduction of novel digital technologies is an opportunity for firms to innovate their digital services, understood as the recombining of existing resources and knowledge to develop a new resource that creates new value for customers (Yoo, Henfridsson, & Lyytinen, 2010). According to service-dominant logic, digital service innovation rarely takes place in a vacuum, but through a collaborative process involving multiple actors in an actor-actor network (Lusch & Nambisan, 2015; Lusch, Vargo, & Gustafsson, 2016). The actors who benefit (e.g., customers) are always part of value co-creation (Lusch & Nambisan, 2015). Digital service innovation requires information sys- tems (IS) organizations to cooperate proactively and early on with businesses to jointly develop and implement digital innovations (Urbach et al., 2019). Moreover, IS organizations need organizational mechanisms that support the integration of resources and activities among the actors cooperating in the service ecosystem (Lusch & Nambisan, 2015), conceptualized as a “relatively self-contained, self- adjusting system of resource-integration actors connected by shared institutional arrangements and mutual value creation through service exchange” (Vargo & Lusch, 2016, p. 16). In this article, grounded in service-dominant logic, we hypothesize that process reference frameworks (PRFs) act as institutional arrange- ments through their norms, rules and practices, which enhance IS or- ganizations´ ability to innovate digital services in cooperation with customers. IS organizations offer services to customers internally in an organization and/or externally to a market. We subscribe to the per- spective that the cooperation of an IS organization and its customers can be viewed as a service ecosystem. Institutional arrangements are assemblages of interdependent institutions, such as norms, rules, meanings, symbols, and practices, which the actors cooperating in a service ecosystem share (Baron, Patterson, Maull, & Warnaby, 2018). In the innovation process, institutional arrangements enable and constrain human action, as well as coordinate interactions among various actors (Scott, 2013). Identifying the existence and understanding the impact of institutional arrangements are essential for IS organizations and https://doi.org/10.1016/j.ijinfomgt.2020.102150 Received 27 November 2019; Received in revised form 15 May 2020; Accepted 15 May 2020 ⁎ Corresponding author. E-mail address: jon.iden@nhh.no (J. Iden). International Journal of Information Management 54 (2020) 102150 0268-4012/ © 2020 Elsevier Ltd. All rights reserved. T