Swanson's tri‐core model and typology of IS innovation is used to analyze Web services as IS innovation. Reconciling theoretical and practical perspectives, we develop a three‐layer nested‐stage model as a road map for studying Web services innovation. Most current Web services practice is at the first stage as IS technological process innovation (Type 1b). High compatibility, high divisibility, and high customizability are the primary characteristics of Web service (Type 1b), which originate from the innovation invention layer. Perceived communicability, perceived relative advantage, perceived complexity, and financial cost are the secondary characteristics of Web services (Type 1b), which are located at the innovation adoption layer. We propose a readiness model to illustrate the key controllable factors that influence the adoption decision of Web services (Type 1b): innovation awareness readiness, innovation‐needs fit readiness, technological skills readiness, and financial resources readiness.
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