For a very long time, Innovation has been viewed as technological phenomenon representing technological advancement in product or process features. A lot of research can be found in literature representing product innovation management supported by empirical studies, however, prospect of service innovation management has been largely ignored. Especially there is very limited research on service development process in third party logistics companies.

This research aims to bring a holistic view of innovation management in third party logistics (3PL) companies so that a better understanding can be developed and it can be examined if existing innovation models are valid for 3PL companies.

To achieve the objectives of this thesis, relevant literature has been reviewed extensively so that conductors of this research can get benefit of existing knowledge in the field and a duplication of research can be avoided. This research work is based on qualitative case study and Green Cargo Logistics AB (which is one of well established third part logistics (3PL) companies) was selected in order to find answers to research questions, which were resulted from the research gaps, found in existing literature. Findings from the case company are discussed in connection with theory and an analysis is made to reach on following conclusion.

Conclusions: An innovative 3PL company has better ability to stay competitive and increase its market share through a better ability to serve it with new better services. Along with technological advancement, spotted opportunity for business growth, threat from competition and customer demand, environmental concerns have also been recognized as driving force for innovations in 3PL. This thesis also shows that a small independent unit (group of people) can play role of innovative organization to prosper creativity by improving interactions with external and internal linkages. This research illustrates that contrary to existing literature (which says there should be one single strategy for innovation management process), a flexible and adaptive strategy can be equally or more effective. For balancing risks and rewards while selecting development projects, consideration of return on investment (ROI) is found to be the most important decision criterion. For implementing the selected innovative idea, a small-scale test should be conducted in order to avoid risks associated with development projects.