Digital servitization strategies for SME internationalization: the interplay between digital service maturity and ecosystem involvement

Milad Kolagar,Wiebke Reim,Vinit Parida,David Sjödin

doi:10.1108/josm-11-2020-0428

Milad Kolagar, Wiebke Reim + Show 2 more

Open Access

https://doi.org/10.1108/josm-11-2020-0428

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Abstract

PurposeThe purpose of this study is to understand how digital servitization enables the process of internationalization for industrial SMEs.Design/methodology/approachThe present study has adopted an exploratory multiple case study, conducting a total of 40 interviews in a two-phased approach to data collection. The first phase consisted of exploratory interviews with twenty-six industrial SMEs connected to the manufacturing industry in Sweden and Finland. Then, six SMEs were selected in the second phase to participate in additional in-depth interviews.FindingsFirst, this study identifies three gradual enabling phases concerned with the digital service maturity of SMEs consisting of digital awareness, digital service innovation and digital service mass customization. Second, the three interdependent phases of ecosystem knowledge synergy, ecosystem integration and ecosystem value co-creation were identified to improve ecosystem involvement. Finally, a process framework has been developed for SME internationalization consisting of a digital servitization innovation strategy, a digital servitization ecosystem strategy and a digital servitization scaling strategy.Originality/valueThe present research contributes to how digital servitization enables SME internationalization by demonstrating how the development of digital service offerings and ecosystem partnerships supports the internationalization process. This research extends the literature by proposing a process framework for the digital-servitization-enabled internationalization of SMEs. This process perspective provides a richer explanation of the complex interplay between servitization, digitalization and ecosystems choices, which supports the expansion into international markets.

Highlights

Digital servitization, an increasingly prevalent trend in industry, is defined as “the transformation in processes, capabilities, and offerings within industrial firms and their associate ecosystems to progressively create, deliver, and capture increased service value arising from a broad range of enabling digital technologies such as the internet of Things (IoT), big data, artificial intelligence (AI), and cloud computing” (Sj€odin et al, 2020b, p. 478)
The purpose of this study is to understand how digital servitization enables the process of internationalization for industrial small and medium-sized enterprises (SMEs)
Building on theoretical sampling (Eisenhardt, 1989; Eisenhardt and Graebner, 2007b), the case selection criteria were informed by the study’s purpose – to understand how digital servitization enables the process of internationalization for industrial SMEs

Summary

Introduction

An increasingly prevalent trend in industry, is defined as “the transformation in processes, capabilities, and offerings within industrial firms and their associate ecosystems to progressively create, deliver, and capture increased service value arising from a broad range of enabling digital technologies such as the internet of Things (IoT), big data, artificial intelligence (AI), and cloud computing” (Sj€odin et al, 2020b, p. 478). While most commonly discussed in the context of large manufacturing firms (Martın-Pen~a et al, 2020; Naik et al, 2020), digital servitization can generate significant growth opportunities for small and medium-sized enterprises (SMEs) by creating increased value for customers, scaling their technological capabilities, and expanding their reach into global markets (Reim et al, 2019). Remote monitoring and preventive maintenance services offer SMEs opportunities to support customers globally and generate new service revenue streams (Sklyar et al, 2019; Tronvoll et al, 2020) This global scalability of digital services may be a competitive necessity for industrial SMEs to recoup their investment in digitalization by attracting a sufficient number of customers. The challenge for SMEs is to build new ecosystems and to align with an array of partners in order to deliver a digital value proposition (Adner, 2017)

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