Servitization as a strategy for diffusing radical technologies: An analysis of U.S. top corporate R&D investors

Abstract

The diffusion of radical technologies poses a significant challenge for firms. While existing studies have mainly concentrated on organizing for radical innovation, less attention has been given to strategies that enable firms to bring these technologies to the product market. In this paper, we argue that servitization – the addition of product-related services to tangible product offerings – can serve as a potential solution, largely due to its ability to reduce customer uncertainty about the nature and utilization of radical technologies and offset adoption costs. However, there are limits to deploying this strategy: developing and implementing service-generating capabilities, together with maintaining and advancing the capability to generate radical technologies, can be costly and risky. Our analysis of 505 top corporate R&D investors from the U.S. manufacturing industry confirms a significant relationship between technological radicalness and servitization, but it is nuanced and depends on the level of financial resources available to firms, known as financial resource slack. More specifically, firms with higher slack have a greater extent of servitization activities when their technologies are more radical. In turn, firms with lower slack have a greater extent of servitization activities when their technologies fall within the middle range of the radicalness spectrum. We use these findings to draw implications for practice and policy.