Abstract
This study examined the relationship between Blue Ocean Strategy (BOS) and value innovation creation in Nigerian service firms. Though the service sector is important in the diversification of the economy, a majority of the companies are stuck in red ocean features where they engage in competition with price wars, absence of differentiation, and declining profit margins. Although BOS provides a model of developing uncontested market space in terms of value innovation, little empirical data is available regarding the role of its four dimensions, namely, eliminate, reduce, raise and create, in value innovation creation in the Nigerian context. A quantitative cross-sectional survey design was used to collect the data from a sample of 201 employees and managers in 36 service firms in the six geopolitical zones in Nigeria. The rank correlation analysis conducted by Spearman showed that all four dimensions of BOS positively correlated with value innovation: eliminate (ρ = 0.782), reduce (ρ = 0.463), raise (ρ = 0.726), and create (ρ = 0.744) and all had significant p-values of less than 0.01. The research concludes that the systematic use of BOS principles can revolutionize value innovation because of the ability of the firms to escape the stagnant markets and provide high customer value at reduced costs. It is suggested that adoption and institutionalization of the BOS framework especially, the eliminate and create strategies- should be done by the service firms in Nigeria to facilitate innovation, enhance competitiveness, and sustainable growth in the uncontested market spaces.