Purpose: This research focuses on firm resources and capabilities used for value co-creation in service innovation. Specifically, I investigated how service innovation is created in an in-ternational engineering company. The aim of this article is to reveal what resources and capa-bilities are employed by a service provider for value co-creation in the innovation project of engineering service and how they vary in particular stages of this project.

Methodology: The research is based on qualitative methodology by a multi-case study strate-gy. Focus group discussion with senior managers and semi-structured interviews with project managers of the studied international engineering company were used as concrete data gather-ing methods. Data analysis was conducted using the content analysis method.

Findings: The research revealed eight value co-creation activities accomplished by the engi-neering company and client during the engineering service innovation project. The activities are as follows: co-identification of the client’s problem, co-evaluation of ideas, co-defining of client’s requirements, co-analysis of environment, co-design, co-testing, and co-adoption, co-production, and co-activities after the launch. These activities are diffused in different project stages and demand a range of resources: expert knowledge, diagnostic, communication skills, trust, experience, technological equipment, human resources. Moreover, they require diverse capabilities: relational, innovative, analytical, negotiation, knowledge absorptive, planning, organizational flexibility, and cross-cultural. The intensity and variety of using the mentioned resources and capabilities differ relying on the value co-creation activity. Expert knowledge, communication skills as resources, and relational and innovative capabilities were empha-sized by the researchers most often. We hope these findings will represent a step toward a more coherent resource-based view (RBV) and service innovation theories.

Implications: The study involved only one Lithuanian engineering company, so the research context may influence the findings. Another limitation is related to the small number of cases and research participants.

Originality: Unlike previous studies that revealed the importance of single resources and ca-pabilities for service innovation, this study determined the range of resources and capabilities employed in different activities of engineering service innovation project stages, especially in the value co-creation activities performed by the engineering company and clients. Moreover, research also identified how resources and capabilities vary at different stages of these pro-jects.