Servitization Strategy Research Articles

Mapping circular economy principles and servitisation approach in business model canvas: an integrated literature review

It is a common perception that circular economy (CE) principles positively influence the servitisation strategy. The firms improve their productivity and resource/energy efficiency by engineering functional efficacy in a sustainable product. However, the managerial practices that support this distinctive business model (BM) are relatively sparse despite their liaisons. Therefore, this paper is focused on addressing this gap by investigating the managerial practices that firms can implement to explore the downstream opportunities of CE and servitisation BM. This paper uses a systematic literature review (SLR) approach to frame a theoretical model. The findings were improved by cross-validation using a text mining technique, demonstrating how organisations may co-create and extract value through CE and servitisation to develop a flexible management system. This study used the business model canvas antecedents to map a set of managerial practices to understand the mythography of the servitisation approach with CE principles. The findings show that identifying key stakeholders assists a firm in selecting an appropriate strategy based on sustainable value propositions that include cost structure and revenue streams to close the resource loop. Managerial commitment is critical in achieving the maximum economic, environmental, and societal potential. A few research agendas with distinct research orientations are proposed to mitigate the significant research gaps in CE and servitisation literature. This study provides managers and practitioners with some intriguing insights as it emphasises the need to select a suitable strategy to utilise a firm's resources successfully.

Servitisation of SMEs through strategic alliances: The role of intellectual capital

AbstractThis research sought to uncover the role played by intellectual capital (IC) in the interplay between strategic alliances of small‐ and medium‐sized enterprises (SMEs) and servitisation strategies. An in‐depth investigation of a single case represented by an SME consortium in the elevator industry served as the empirical context. Multiple sets of data were examined by integrating the analysis of documents with the analysis of data gathered through semi‐structured interviews. We found that a strategic alliance among SMEs constitutes a form of relational capital and creates/improves other components of IC that support the formulation of the servitisation strategy and enable its implementation. The development of IC triggered by the formation of a strategic alliance appears to function as a driver of the servitisation strategy and to influence the innovation process. The value of this research lies in the analysis of IC in a new context—the servitisation of SMEs through strategic alliances—that focusses on interrelations among multiple forms of capital.

Exploring servitization and digital transformation of manufacturing enterprises: evidence from an industrial internet platform in China

Servitization is vital to manufacturing enterprises’ competitive advantages and financial performance in contemporary digitalisation environments. Enterprises are increasingly relying on industrial Internet platforms to satisfy potential customers’ needs as well as to create superior value, but the literature has neglected to explain how enterprises can leverage such digital platform to improve the efficiency and effectiveness of servitization. This study aims at describing how the industrial Internet platform can enable servitization of manufacturers. Based upon the meta-theoretical foundations of service-dominant logic, we identify the ‘sense and respond’ servitization strategy enabled by the industrial Internet platform. By performing a questionnaire survey, we find that the industrial Internet platform approach based on the connectivity and compatibility architecture can enable manufacturers to improve the efficiency of resource integration and resource reconfiguration, which facilitates the implementation of servitization via market perception . We argue that the industrial Internet platform affects an organisation’s ability to sense the market and resource management actions; these operational resource actions are a significant antecedent of the servitization strategy.

Organizing Maintenance Service Contracts for Initial Purchases: The Interplay Among Product Type, Service Type, and Service Approach

Organizing Maintenance Service Contracts for Initial Purchases: The Interplay Among Product Type, Service Type, and Service Approach

Which type of servitization promotes firm performance: Embedded or hybrid?

The diversity and complexity of manufacturing firms' servitization strategies are increasing; however, theoretical developments have provided little guidance on the practice of differentiated servitization strategies for firms. In terms of product relatedness and the degree of integration in the value chain, servitization is divided into two categories: embedded (product-related service offerings) and hybrid (product-unrelated service offerings). Based on a large longitudinal dataset of Chinese manufacturing firms between 2012 and 2018, this study empirically investigates the heterogeneous impact of different types of servitization on firm performance. The results reveal a U-shaped effect of embedded servitization on firm performance; in contrast, hybrid servitization plays a linear negative role. Innovative resources and asset specificity positively moderate the effect of embedded servitization on a firm's profitability and aggravate the negative impact of hybrid servitization on firm performance. The findings provide guidance for manufacturing firms to choose the best servitization strategy to achieve profitability.

The effects of digital servitization on business competitiveness: A case study of Spanish manufacturers

In recent years, interest has grown in servitization strategies as business models for selling combined packages of goods and services to create competitive advantage to provide great customer value. Various studies have examined the benefits servitization offers to both businesses and their customers; however, there is very little research on the moderating role played by the digital enablers of Industry 4.0 on servitization. It is this research gap that the present study aims to fill. Using a framework developed from the extant literature, case studies, with an exploratory objective, were conducted to the aim of identifying and analyzing the challenges and opportunities that could be presented in those companies that decide to develop digital servitization. To achieve it, this study focuses on a deep analysis of the experience in five manufacturing companies, and, from that, we draw significant conclusions (both for further research and for business practice) about the strategy of servitization and the moderating role of Industry 4.0 on business competitiveness. We first carried out detailed interviews with key personnel from companies, complementing that with additional information from various sources before analyzing the results to identify emerging topics. The qualitative study allowed us to highlight how the different kinds of digital technologies supported servitization and product innovation. In addition, it provides empirical evidence about the different servitization strategies and Industry 4.0 digital enablers, which, in combination, allows companies achieving increased competitiveness, generate greater returns, find new customers, access new markets, and develop new business ideas.

Impacts of Servitization Strategies on Ecosystem Leadership Development

The surge of interest in servitization in the strategic management literature focuses mainly on intra-firm issues. This study complements work on servitization by positing that servitization represents a radical shift in how ecosystems are renewed and how ecosystem leadership is developed. Servitization changes the way the focal firm creates, delivers, and captures value for its consumers, consequently impacting the entire multi-actor “chain” of value creation. We argue that during the ecosystem renewal stage, adopting different types of servitization strategies has different effects on ecosystem leadership development. We develop a conceptual framework to analyze the impact that different servitization strategies have on ecosystem leadership development. We use a real-world case to illustrate and support our conceptual framework. We discuss different implications of our framework for ecosystem alignment, ecosystem business models, and collaborations. The study contributes to the growing research on the interplay between servitization and ecosystems.JEL Codes: M1

Development of an augmented reality remote maintenance adoption model through qualitative analysis of success factors

In recent decades, engineering manufacturers have increasingly adopted servitization strategies, making efficient maintenance service delivery a key corporate activity for revenue growth and profitability. Recently, augmented reality remote maintenance (ARRM) has become available and promises service delivery efficiency gains, which is why engineering manufacturers are starting to adopt it. Therefore, the purpose of this paper is to analyze the promoting and inhibiting factors of ARRM adoption in support of industrial service delivery. To this end, a qualitative explorative approach based on the technology–organization–environment (TOE) framework has been deployed. Data were collected from a systematic literature review and an empirical interview study with 16 companies. In total, 38 interviewees from different hierarchical levels participated in the interview study. Based on a thematic analysis, this paper provides a novel ARRM adoption model and contributes six technological, seven organizational, and four environmental adoption success factors. The promoting factors are ARRM key features, qualitative operational advantages, quantitative operational advantages, value proposition, value creation network, finance, image, adoption management, resource allocation, strategic realignment, skills gap, and governmental regulation; further, augmented reality user experience, data connection, information provision, intellectual property protection, and remote service acceptance were identified as inhibiting factors. This paper qualifies as the first attempt to consolidate engineering-focused ARRM literature with respect to remote service delivery, adding the industrial adoption perspective and elaborating on the impact of the inter-organizational nature of ARRM technology on industrial adoption. Thus, this research contributes to the transition from pure engineering research to industrial ARRM adoption research.

Building digital servitization ecosystems: An analysis of inter-firm collaboration types and social exchange mechanisms among actors

The servitization literature has evidenced that the development and provision of Smart Product-Service Systems usually happen through collaborative ecosystems, but little is known about the different arrangements that ecosystem's actors can follow to provide digital solutions. We aim to define collaborative configurations of ecosystem actors in digital servitization based on their value creation and capture and their social base of collaboration. We propose four configurations of inter-firm collaboration, based on the level of joint value creation activities and value capture interdependence among the actors: expanded business, enhanced business, platform business and symbiotic business. We analyze how these different collaboration types operate based on a multi-case study approach using the Social Exchange Theory (SET) to examine actors' interactions. We focus on four elements of SET: trust, commitment, reciprocity, and power. We found that trust, commitment and reciprocity are related to value creation and capture dynamics, while power is mostly affected by other external factors. These four elements allow to define the operationalization of the four types of inter-firm collaboration in digital servitization ecosystem. We contribute to the theory showing how service and digital suppliers interact with the servitized product firm in the ecosystem. Managers can learn the elements involved in different business models and collaboration arrangements for the provision of servitized digital solutions aiming to better decide the servitization strategy they want to follow.

International servitization: theoretical roots, research gaps and implications

PurposeWhile the servitization concept has gained increasing attention in the domestic marketing literature, there is more limited knowledge with respect to its implications within the international context. The purpose of this paper is to examine the servitization concept in the international context considering its boundary conditions and its effects on firm performance. Relying on the resource-based view and the boundary conditions function, the authors aim to identify a set of research gaps focusing on how strategic resource decisions (i.e. slack resources and digital marketing capabilities) help industrial firms to provide different types of service offerings (i.e. services in support of product (SSPs) and services in support of client's actions (SSCs)) that leverage their performance in international markets.Design/methodology/approachThe authors illustrate international servitization strategies and the boundaries of servitization activities that firms employ through a series of case vignettes. The authors derive a conceptual framework, serving as a guideline for future research endeavors.FindingsThe authors indicate the importance of servitization strategies in international markets and identify eight research gaps, which help to build an agenda for future research. Key differences between international servitization strategies and strategic resource decisions are addressed through illustrative case vignettes from different industries.Practical implicationsThe insights from this work inform marketing executives about how international servitization strategies are influential in the context of overseas markets by characterizing the servitization concept and elaborating upon the specific resources and capabilities that underpin its execution in foreign markets.Originality/valueThis conceptual paper provides a comprehensive understanding of international servitization strategies in overseas markets and identifies several research paths that contribute to the complex nature of servitization in the international context and help scholars spot gaps and research questions worthy of investigation.

Integrating distribution, sales and services in manufacturing: a comparative case study

PurposeThe aim of this study is to gain important insights on integration oriented servitization identifying essential dimensions of effective structures, coordination approaches and management controls adopted by manufacturing firms that integrate forward towards distribution, sales and services.Design/methodology/approachThe study adopts a theory-guided qualitative abductive methodology to conduct a comparative case-study of two manufacturing firms in the same industry integrating forward to enhance servitization but with significantly different performance outcomes. The findings are uncovered from a broad spectrum of primary and secondary data spanning two decades.FindingsThe consistently high-performing firm puts equal emphasis on production and downstream distribution, sales and services and motivate individuals to engage in entrepreneurial efforts to develop combined product-services offerings that are valued by customers. The underperforming firm prioritizes operating efficiency driven by engineering prowess and managed through planning, standardization, authority and central controls.Research limitations/implicationsThe study is based on two representative firms operating in a specific industry context, which has ramifications for the generalizability of results and calls for replication studies to substantiate and extend findings.Practical implicationsForward integration from manufacturing into distribution, sales and services represents a specific servitization strategy that needs structure and particular coordination approaches to be effective in complex dynamic product-markets. The characteristics of the outperforming case company provide useful insights on effective integrated servitization efforts.Social implicationsForward integration is a commonly adopted strategy among manufacturing firms that constitute the backbone of modern economies and effective governance of these integration oriented servitization efforts has important implications for societal value creation.Originality/valueThis study builds on rationales from management science including economic theory, corporate strategy and different micro-foundational lenses and thereby hone recent calls for broader theoretical foundations to enlighten studies of the servitization puzzle.

Servitization strategies: shortcomings and opportunities in offering products and services in the agricultural segment

Purpose – To analyze current and potential servitization strategies, from the perspective of rural producers in the West of the Brazilian state of Parana in relation to its inputs and agricultural equipment. Design/methodology/approach – The study has a qualitative and exploratory approach, based on interviews with rural producers who work in grain production and use products and services related to the supply of inputs for their crops. Findings – Managerially, it was found that producers did not show exclusive loyalty to a certain brand of equipment or agricultural input, but consider the offer of after-sales services and quality technical assistance in the decision. New services demanded by producers were identified and these services may favor purchasing products from the same suppliers. There are gaps that allow exploiting opportunities in terms of servitization, given that not all services that were expected to have been supplied, were supplied by suppliers. Originality/value – This study stands out for its analysis of servitization from the point of view of rural producers in relation to suppliers of agricultural machinery and inputs. It identifies new opportunities in the greater use of technologies, greater transparency and sharing of technical knowledge, improvement of technical assistance and post-sales service at more affordable prices. Keywords – Service; Agribusiness; Production chains; grain production; agricultural inputs.

Barriers to the adoption of digital servitization: a case of the Sri Lankan manufacturing sector

PurposeThis research aims to identify, examine and evaluate barriers to the adoption of digital servitization in manufacturing firms in the case of the Sri Lankan manufacturing sector and analyze the inter-relationships among digital servitization barriers.Design/methodology/approachBased on the comprehensive literature review, 13 barriers were identified. The grey decision-making trial and evaluation laboratory (grey-DEMATEL) approach was used to uncover and analyze the relationships among barriers in terms of their overall influence and dependencies.FindingsA prominent barrier to the success of adopting digital servitization in the Sri Lankan manufacturing sector is the lack of digital strategy in developing activities related to the design of digital service packages, organizational structures and processes. Supply chain integration is the most influential factor, which plays an important role in developing a competitive advantage by encouraging innovation process capabilities in servitized companies.Practical implicationsIndustry practitioners can develop guidelines for adopting digital servitization practices based on the importance and interdependencies of different barriers and thereby prioritize projects within a program of digital servitization adoption in their organizations.Originality/valueResearch studies on barriers to digital servitization are limited to exploratory nature and have adopted mainly the qualitative approach, such as in-depth interviews. No empirical study has investigated the inter-relationships among digital servitization adoption barriers in the manufacturing sector. This study provides a holistic view of different barriers to the adoption of digital servitization in the manufacturing sector as a basis for developing comprehensive digital servitization strategies to manage and leverage complexity in digital transformation.

Environmental performance of servitized manufacturing firms: the (mis)alignment between servitization strategies and inter-organizational information technology capabilities

PurposeThis study investigates the different effects of the (mis)alignment between servitization strategies (i.e. product-oriented and customer-oriented services) and inter-organizational information technology (IT) capabilities (i.e. IT reconfiguration and integration) concerning the environmental performance of servitized manufacturing firms.Design/methodology/approachUsing hierarchical regression analysis, this study examines the theoretical model based on multi-respondent survey data from 1,149 senior managers of 383 manufacturers in China.FindingsProduct-oriented services have a non-significant effect on environmental performance, whereas customer-oriented services exert a significantly positive effect. The alignment between product-oriented services and IT reconfiguration, and that between customer-oriented services and IT integration, improve environmental performance. In contrast, the misalignment between product-oriented services and IT integration, and that between customer-oriented services and IT reconfiguration, hurt environmental performance.Originality/valueThis study elucidates the different effects of the (mis)alignment between servitization strategies and inter-organizational IT capabilities on environmental performance. It also resolves the inconsistency regarding the implications of servitization on environmental performance.

Asset Management Framework and Tools for Facing Challenges in the Adoption of Product-Service Systems

Servitization is recognized as a key business strategy for original equipment manufacturers willing to move up the value chain. However, several barriers have to be overcome in order to successfully integrate products and services. Many of these barriers are caused by the technical challenges associated with the design and management of the product-service systems (PSSs), such as life cycle service level and cost estimation, risk management, or the system design and pricing. Asset management (AM) presents itself as a key research area in order to overcome these barriers as well as to integrate PSSs within the manufacturers’ operations management. It is the scope of this article to provide theoretical and practical insights with regards to the alignment of AM and PSS research areas. To support the alignment between both areas, a management framework which gathers specific technologies, including reliability analysis, simulation modeling, and multiobjective optimization algorithms, is presented. The purpose of the framework is to provide manufacturers with a decision-support tool that facilitates the main managerial challenges faced when implementing a servitization strategy. The article contributions are successfully applied to case studies in the railway and wind energy sectors based on real field data, thereby demonstrating their suitability for both facilitating manufacturer’s decision-making process and better satisfying stakeholders’ interests.

Integrating Digital Transformation and Servitization into Digital Servitization: A Case Study on Domino's

Purpose: The purpose of this study is to suggest a digital servitization model which can be implemented by the restaurant industry and to explore the opportunities and challenges of digital servitization.
 Design/methodology/approach: The case study analysis method was applied for this research.
 Findings: This study reveals that pizza firms can gain competitive advantages and create value by implementing the digital servitization business model. In addition, firms can understand the opportunities and challenges of digital servitization and prepare themselves before implementing the business model.
 Research limitations/implications: Digital servitization model was proposed to analyze a single pizza company but a comparative study with other firms can be conducted to identify differences and create a common strategy.
 Originality/value: Firms commonly use an integrated digital transformation and servitization model to create customer value, but few case studies on integrated case models are available. This study investigates this research gap using a case study. The findings of this study have meaningful implications for restaurant managers to implement a digital servitization strategy.

Enhancing servitization by international consumer integration: the influence of open innovation and co-creation

PurposeResearch demonstrates that servitization can achieve competitive advantages for firms; however, many firms are unable to achieve their target values due to various challenges. This study proposes a new model in which open innovation and co-creation are utilized to access consumer knowledge during the servitization process when developing customized services for international markets.Design/methodology/approachAn online survey was used to collect the data from 150 manufacturing firms. The data were analyzed using the partial least squares (PLS) approach.FindingsThe results indicate that open innovation positively affects servitization strategy. Moreover, consumer co-creation moderates the impacts of servitization on firm performance.Practical implicationsThis study confirms the significant role of open innovation and consumer integration in the servitization process, establishing that managers should effectively integrate different stakeholders from the service design stage (through open innovation) to the service delivery stage (through co-creation).Originality/valueThe paper's results prominently advance the present body of servitization literature by showing how the implementation of open innovation improves the servitization process, an issue that has been ignored in previous studies. Moreover, it seeks to resolve the inconsistent results on servitization's effect on performance by indicating the role of consumer co-creation in the servitization–performance link.

Re-discussion of servitization strategy and firm performance.

Servitization innovation is critical for manufacturing firms to strengthen their sustainable competitive advantage in a dynamic business environment. Current research on the relationship between servitization and firm performance has matured, but many conclusion remain divergent. That cannot only hinder the development of servitization theory, but also make manufacturers lack a scientific basis for deciding whether to develop servitization. Thus, this study aims to systematically analyze the quantitative research results in this field through Meta-analysis methods to reveal the reasons for the disagreement. After collecting 59 independent articles on servitization and firm performance, this study performed statistical analysis using Meta-analysis. Then, the relationship between servitization and firm performance was explored, as well as the effects of different potential moderating variables. The moderate positive relationship between servitization strategies and their different orientations and firm performance is found. For the moderating variables, the servitization strategy has a more significant effect on non-financial performance. And they are more correlated when there are mediator variables. The impact of firm servitization transformation in developing regions is better than in developed areas. A stable market environment is more beneficial to the servitization transformation. The transformation effect of high-tech manufacturing is better than that of traditional manufacturing. And the transformation effect of large companies is better than that of small and medium-sized companies.

Supply chains and ecosystems for servitization: a systematic review and future research agenda

PurposeRecent research has recognised the importance of supply chains and ecosystems as key drivers of successful servitization strategies, especially in the context of inter-organisational relations (IOR). The body of knowledge has, however, become increasingly fragmented and diverse due to different disciplinary roots of both servitization and IOR research. The purpose of this paper is to take stock of current knowledge and to generate a set of future research directions for servitization-related supply chain and ecosystem research.Design/methodology/approachA systematic review methodology was applied. A thematic analysis was conducted on a sample of 34 papers in the period 2010–2021 to identify the key themes within the servitization-related supply chain and ecosystem literature.FindingsThe review revealed a limited, but expanding, knowledge base for servitization-related supply chain and ecosystem research. The findings provide insight into current trends across four thematic areas: theoretical orientation, methodological approaches, research context and research content. Within these themes, it was found that four main areas of research content have been studied (supplier relationships, risk perception and uncertainty, capability development and resource integration), with most research adopting case-based methodologies within three main industrial contexts: manufacturing, industrial and software. Finally, a broad range of theoretical orientations have led to an increasingly fragmented and diverse literature base.Originality/valueThis study is the first to review servitization-related supply chains and ecosystems. It contributes insights through an IOR lens to categorise and organise a core set of themes and concepts for servitization-related supply chain and ecosystems research. It identifies research gaps within the extant literature and presents a set of future research directions.

Enabling collaboration on digital platforms: a study of digital twins

ABSTRACT Digital platforms are transforming almost every industry today and are expected to revolutionize future value creation. Digital platforms require collaboration, but this is challenging especially in the manufacturing industry where sensitive data need shared and high investments are required. Therefore, the purpose of this study is to enhance the understanding of how to successfully collaborate on digital platforms in the manufacturing industry by developing a contingency framework. The study is an explorative single case study of a digital platform. More specifically, the study examined the development process of a digital twin platform created by a large high-technological company and its collaborative actors. The results are based on 21 semi-structured interviews and reveals that actors on digital platforms can face five types of challenges that hinder a successful collaboration: disadvantages of dependency, uncertainty regarding data management, varying customer needs, insufficient work methods, and unsuitable payment models. The analysis also reveals four strategies that can be used to address the challenges: transparency strategy, incentive model strategy, servitization strategy, and control strategy. Moreover, these findings are summarized in a contingency framework that explains which types of challenges that can be addressed with which strategies based on the specific prerequisites of each collaboration.