Value Leakage in Product–Service System Provision: A Business Model Alignment Perspective

Wiebke Reim,Sambit Lenka,Johan Frishammar,Vinit Parida

doi:10.1109/tem.2022.3144741

Wiebke Reim, Sambit Lenka + Show 2 more

Open Access

https://doi.org/10.1109/tem.2022.3144741

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Abstract

To stay competitive, manufacturing companies offer product–service systems (PSS) to avoid commoditization of their products. The potential to create value through PSS offerings lies in a company's ability to successfully implement the PSS business model. However, many companies are unable to realize the benefits because PSS represents significant changes to all the business model elements, which comprise value creation, value delivery, and value capture. This leads to misalignment among the business model elements, which is a topic of interest within PSS and business model literatures. This article aims to provide empirical insights into the business-model-element alignment problems and conceptualize their consequences, which manufacturing companies face during PSS implementation. This article utilizes an abductive multicase study of three Swedish manufacturing companies with long-term experience of PSS provision to provide novel insights by identifying six alignment problems that companies face as a consequence of the interaction among the three business model elements. Furthermore, we contribute to both the PSS and business model literature by conceptualizing the consequences of business model element alignment problems, explaining the three value leakages that occur as a result of inappropriate resource and capability utilization, unattractive offer configurations, and inefficient service network processes in PSS provision.

Highlights

N UMEROUS manufacturing companies are increasingly differentiating their offerings and attempting to generate new revenue streams through integrating product and service components, often referred to as product–service systems (PSS) [1], [2]
A technology planning director from Company 1 explained: Analyzing both primary and secondary data, we pinpointed six underlying problem themes that underpin the implementation of PSS business models
The present article provides insights into business model alignment problems and their consequences, which are manifested through value leakages as manufacturing companies in B2B settings make the transformation to PSS provision [37], [40]

Summary

Introduction

N UMEROUS manufacturing companies are increasingly differentiating their offerings and attempting to generate new revenue streams through integrating product and service components, often referred to as product–service systems (PSS) [1], [2]. Offering PSS is inherently challenging for organizations because provider companies must transform their. Manuscript received June 26, 2021; revised November 2, 2021; accepted December 22, 2021. Review of this manuscript was arranged by Department Editor A.-L. Prior article suggests that offering PSS represents a significant transformation of the business model of manufacturing companies [1], [8]. Most companies fail to achieve the desired benefits from such a transformation [9]–[11]

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