Digital technologies and product-service systems: A synergistic approach for manufacturing firms under a circular economy

Abstract

The product-service system (PSS), in which customers pay for a product's functionality, is the common business model in a circular economy (CE). Digital technology (DT) is considered to be a crucial enabler of a PSS that facilitates CE integration in businesses. While discussions concerning the capacity of DT to overcome the main challenges posed by CE are growing, the specific evolution path of a PSS that can evolve to the level required by a CE and for the development of DT for each PSS type have not been widely explored. This paper reviewed a multiple-case study involving three manufacturing firms that each used PSS in business evolution projects and proposes guiding principles that can be used to support an effective approach to using the PSS to facilitate a CE at the business evolution stage. Moreover, in this systematic approach, DT impacts PSS deployment by acting as an enabler. The results contribute to theory by advancing the discussion exploring the potential relation between business evolution and circular principles through the mapping of PSS types. Explicit knowledge of the design principles behind PSS approaches can be obtained by analyzing this relationship. In addition, precise DT adaptation has been found in this study to be able to integrate toolsets that satisfy a variety of product demands and productivity plans by using specific technology to develop iterations for increasing service quality. From a practical perspective, this paper can help practitioners navigate the evolution of their businesses through the PSS model to enable a CE that is based on their existing digital and business capabilities.