THE PHENOMENON, CAUSES AND EFFECTS OF INTEGRATING ICTS IN MANUFACTURING PRODUCTS

Abstract

The rapid and persistent improvement in the performance and cost of Information and Communication Technologies (ICTs) with respect to their capabilities for capturing, processing, displaying, communicating and storing information provide abundant opportunities. This paper aims to explain the causes and effects of the phenomenon in which manufacturing firms integrate ICTs in their established manufacturing products. The study of this phenomenon is based on structured interviews with executives of 37 large Swedish manufacturing firms. The results show that the phenomenon is wide-spread among manufacturing firms, that the number of products that integrate ICTs is growing relative to firms' total product portfolios, and that the revenues from these products are increasing. Competition is a significant reason why firms integrate ICTs into their goods, but firms also want to reap the rewards of the value provided. Important here is that firms often find it necessary to transform aspects of the way they do business (business model) in order to create a better fit between activities that create value for their customers and activities that produce profits for themselves. They also try to find innovative ways to be rewarded for the value they deliver, mainly based on the provision of services.