Servitization describes the addition of services to manufacturers' core product offerings to create additional customer value. This study aims to identify the key themes and research priorities in ...this body of literature over thirteen years from 2005 and 2017, based on four major research streams (general management, marketing, operations, and service management). Prior multi-theme literature reviews have focused on operations journals, overlooking important work in other streams, particularly marketing. Informed by a systematic literature review of 219 papers, the study identifies five main themes: service offerings; strategy and structure; motivations and performance; resources and capabilities; service development, sales, and delivery. Within each theme, gaps in the literature are identified and eleven research priorities presented. The review shows that the literature has evolved significantly in recent years, becoming increasingly diverse. A recent noteworthy topic is the use of digital technologies, which indicates the increasing relevance of technological developments to manufacturers' service activities. Our review highlights that there are still some fundamental aspects of servitization that warrant further research, primarily the need to replace the focal-manufacturer perspective with a multi-actor perspective that highlights the important role of relationships with existing and potentially new actors as a result of technological developments.
•The study provides a holistic account of the literature on servitization.•Knowledge gaps and research priorities are identified around a set of key themes.•The servitization literature has evolved significantly, becoming increasingly diverse.•More recent topics deal with digitalization and technological developments.•Fundamental aspects (e.g., a multi-actor perspective) still warrant further investigation.
Service growth in product firms is one of the most active service research domains and is open to a variety of conceptualizations. This article provides a critical inquiry into the past, present, and ...future of the research domain. The evolution of the research on service growth is discussed in two phases: (1) setting the boundaries of the research domain, and (2) emergence of the conceptual foundation. We find that while research in this area has a well-established tradition in terms of output, theoretically it is still largely in a ‘nascent’ phase. Next, we highlight the contributions of the papers in this special section, emphasizing their challenges to prevailing assumptions in the research domain. We conclude by identifying, from the contributions to this special section, suggested themes for further research on service growth: the assessment of empirical evidence of the impact of service growth on firm performance, the role of merger & acquisitions in the service growth strategy, the exploration of single/multiple positions along the transition line, the process of adding or removing services, and expanding the context of service growth beyond product manufacturing firms.
•We reflect on the past, present, and future of the research domain.•We discuss the intellectual core of the research on service growth.•The research domain is well-established now, but theoretically is still nascent.•We present themes for further research on service growth.
This study extends the discussion of digital servitization business models by adopting the perspective of the theory of the firm. We use four theories of the firm (industrial organization, the ...resource-based view, organizational identity, and the transaction cost approach) to understand digital servitization business models of firms in the context of ecosystems. Digitalization transforms the business models of solution providers and shapes their firm boundary decisions as they develop digital solutions across organizational boundaries within ecosystems such as harbors, mines, and airports. Thus, digitalization not only affects individual firms' business models but also requires the alignment of the business models of other firms within the ecosystem. Hence, business models in digital servitization should be viewed from an ecosystem perspective. Based on a rigorous literature review, we provide suggestions for future research on digital servitization business models within ecosystems.
Despite the demonstrated opportunities for revenue enhancement through digitalization, companies often experience a digitalization paradox. This paradox suggests that although companies may invest in ...digitalization, they often fail to achieve the expected revenue enhancement. In reporting research on 52 companies, we make the following four contributions: First, we focus on industrial companies in the business-to-business context, which largely have been neglected in previous research on digitalization. Second, we introduce the digitalization paradox as an important phenomenon in the discussion of revenue enhancement through digitalization. Third, we describe three growth paths: (1) commercializing digital solutions, (2) utilizing product connectivity, and (3) establishing an IoT-platform-based application business. For each growth path, the article takes a dynamic perspective on business models, highlighting triggers and modifications in business-model components (including value proposition, value-creation activities, and profit equation). Fourth, while the described modifications require initial investments to let these growth paths develop, we highlight how growth traps can prevent investments in business-model modifications from leading to revenue enhancement and how they can ultimately lead to the digitalization paradox.
•Digitalization without servitization capabilities can lead to negative returns, i.e., the digitalization paradox.•Digital servitization explains profiting from digitalization requires servitization ...in manufacturing firms.•Emphasizing value of servitization in driving financial performance from digitalization, a call for digital servitization.•The results also emphasize the need for high investments in digitalization.•Further studies are needed on the complex relationship between digitalization, servitization and company performance.
The present study investigates the effect of the interaction between digitalization and servitization on the financial performance of manufacturing companies. We challenge the simple linear assumption between digitalization and financial performance with a sample of 131 manufacturing firms and hypothesize a nonlinear U-shaped interaction effect between digitalization and servitization on financial performance. From low to moderate levels of digitalization, the interaction effect between digitalization and high servitization on company financial performance is negative and significant. From moderate to high levels of digitalization, the interplay between digitalization and high servitization becomes positive and significant, improving companies’ financial performance. The results demonstrate the need for an effective interplay between digitalization and servitization, the digital servitization. Without this interplay, a manufacturing company may face the paradox of digitalization. For managers of manufacturing companies, the study provides insights into the complex relationship between digitalization and financial performance, emphasizing the value of servitization in driving financial performance from digitalization. Thus, the study demonstrates how manufacturing companies can become data-driven by advancing servitization.
Higher market complexity and increasing competitive intensity are forcing traditional product-manufacturing companies to change their position in the goods–services continuum by continuously ...extending the service business. However, the existing literature tends to be somewhat vague in defining service strategies for manufacturing companies wishing to move along the continuum. The purpose of this study is to identify service strategies that correspond with specific environment–strategy fits. Using an exploratory factor and cluster analysis for testing Western European firms, the study highlights four different service strategies. The four service strategies include after-sales service providers (ASPs), customer support providers (CSPs), outsourcing partners (OPs), and development partners (DPs). After-sales service providers concentrate on cost leadership and ensure proper functioning of the product. Customer support providers form a unique value proposition by investing in a strong product and service differentiation. Outsourcing partners combine cost leadership with service and product differentiation to offer attractive prices for operational services. Their goal is to assume the operating risk and full responsibility for the customer's operating processes. Development partners provide research and development services to create a situation in which customers benefit directly from their development competencies.
Companies that find innovative ways to manage capabilities gain competitive advantages. The results of multiple case studies of capital goods manufacturing companies suggest that management ...innovation contributes to dynamic capabilities. The findings confirm the importance of sensing, seizing, and reconfiguring as dynamic capabilities. Management innovation differs in terms of whether it contributes to sensing, seizing, or reconfiguring. The findings describe issues of management innovation, such as key change agents and utilization (motivation, invention, implementation, as well as theorizing and labeling), which facilitate sensing, seizing, and reconfiguring. Maintaining capability-driven competitive advantages is not limited to the innovation of products and services, but should also address management innovation that drives dynamic capabilities. The present study relies on a novel conceptualization of dynamic capabilities through management innovation. This conceptualization advances theory-building on the issue of dynamic capabilities.
►We show innovative ways to manage capabilities for gaining competitive advantages. ►We examine the contribution of management innovation to dynamic capabilities. ►Maintaining capability-driven competitive advantages should address management innovation that drives dynamic capabilities. ►We substantiate the importance of sensing, seizing, and reconfiguring as dynamic capabilities. ►Management innovation differs in terms of whether it contributes to sensing, seizing, or reconfiguring.
Both academics and practitioners emphasize the importance for product firms of implementing service-led growth strategies. The service transition concept is well established, namely a unidirectional ...repositioning along a product-service continuum—from basic, product-oriented services towards more customized, process-oriented ones—ultimately leading to the provision of solutions. We challenge this service transition assumption and develop alternative ones regarding how product firms should pursue service-led growth. Using ‘problematization methodology’, and drawing on findings from thirteen system suppliers, we identify three service-led growth trajectories: (1) becoming an availability provider, which is the focus of most transition literature; (2) becoming a performance provider, which resembles project-based sales and implies an even greater differentiation of what customers are offered; and, (3) becoming an ‘industrializer’, which is about standardizing previously customized solutions to promote repeatability and scalability. Based on our critical inquiry, we develop two alternative assumptions: (a) firms need to constantly balance business expansion and standardization activities; and (b) manage the co-existence of different system supplier roles. Finally, we consider the implications for implementing service-led growth strategies of the alternative assumptions.
•We challenge the established service transition assumption•We identify 3 service growth trajectories: becoming an availability provider; a performance provider; and an industrializer•Firms should generally downsize and standardize solutions, thus being able to offer them to a greater number of customers•Firms concurrently hold a number of system supplier roles rather than transferring from one role to another•We present a strong platform for further examination of theoretical and managerial implications of the study
Manufacturers of capital goods may not be able to master internally all the relevant service activities for moving from products to solutions. As well, it is rarely economically viable for them to do ...so. Consequently, they increasingly resort to complex service networks that embrace traditional product-orientated and vertically-integrated supplier–customer relationships. Through multiple case studies this paper identifies four different types of service networks involved in the provision of solutions, and the capabilities necessary for forming and utilizing such networks. The types are: a). vertical after-sales service network, b). horizontal outsourcing service network, c). vertical life-cycle service network, and d). horizontal integration service network. Analyzed through the perspective of the “focal firm”, these network types promote understanding of the movement towards providing integrated solutions for products and services. The service components included in the solution drive the formation of the network along the vertical and horizontal dimensions. The formation and utilization of each service networks type require a specific set of dynamic capabilities (to initiate a specific network formation), and operational capabilities (that allow the network firms to develop, integrate and deliver the service components of the solution), discussed in the paper.
► Capital goods manufacturers often resort to service networks for offering integrated solutions. ► Four networks types proposed: vertical after-sales, horizontal outsourcing, vertical life-cycle and horizontal integration. ► The service components included in the solution drive the typology of service network. ► The set of dynamic and operational capabilities required to focal firms in each network type are discussed.
► The paper addresses manufacturers moving towards the offer of solutions. ► Important decisions concern the service offer and capability development. ► A framework is developed and applied to cases ...of capital goods manufacturers. ► Four different strategic approaches are pointed out. ► They combine in different ways service extension and capability development choices.
The move being made by manufacturers of capital goods from offering products to solutions implies that they must make a decision as to whether the capabilities necessary for providing solutions should be developed internally or externally. However, research has often implied an internal capability development option, and focused mostly on multinational companies. Through multiple case studies, this paper provides a deeper understanding of the strategic decisions about the “make or buy” of capabilities. A framework is proposed for classifying the different approaches adopted by firms, consisting of two dimensions. The first one encompasses the service components driving the move from products to solutions, whilst the second one describes whether the capabilities are developed internally, externally or in a mixed way. The empirical application of the framework suggests four distinct strategic approaches relating the service components and the development of capabilities. They are named “selling after-sales services”, “integrating after-sales solutions”, “selling life-cycle solutions” and “orchestrating total solutions”. The description of these approaches enriches the understanding of the ways in which firms move towards the provision of integrated solutions. Finally, the inclusion in the sample of smaller firms allows to extend the discussion about the transition from products to solutions to contexts different from those of multinational enterprises generally studied.
PDF
