The next phase in servitization: transforming integrated solutions into modular solutions

Digital finance innovation in green manufacturing: a bibliometric approach

In the era of Industry 4.0, the innovative applications of the industrial internet of things continue to deepen, and the trend of digital transformation of the green manufacturing industry continues to expand. In this context, the study of digital finance innovation in green manufacturing enterprises is conducive to transforming and upgrading enterprises and national economic development. In order to review the theoretical foundations and the current state of research under this topic, this paper provides an overview of digital finance innovation in green manufacturing companies based on 296 papers published between 1900 and 2021 through bibliometric and scientific visualization methods. This paper uses HistCite to identify the most influential authors, institutions, and countries and uncover the lineage of research on digital finance innovation in green manufacturing companies. At the same time, VOSviewer is used to identify research hotspots and research clusters under the topic. Finally, on this basis, this paper classifies the types of digital innovation from the perspective of value creation. It proposes a theoretical framework for the realization path of digital finance innovation in green manufacturing enterprises based on intelligent servitization and orchestration capabilities. The findings of this paper enrich the existing innovation theory and facilitate scholars to conduct future research more effectively.

Mechanisms for developing operational capabilities in digital servitization

Purpose

Digital servitization concerns how manufacturers utilize digital technologies to enhance their provision of services. Although digital servitization requires that manufacturers possess new capabilities, in contrast to strategic (or dynamic) capabilities, little is known about how they develop the required operational capabilities. The paper investigates the mechanisms for developing operational capabilities in digital servitization.

Design/methodology/approach

This paper presents an exploratory study based on 15 large manufacturers operating in Europe engaged in digital servitization.

Findings

Three operational capability development mechanisms are set out that manufacturers use to facilitate digital servitization: learning (developing capabilities in-house), building (bringing the requisite capabilities into the manufacturer), and acquiring (utilizing the capabilities of other actors). These mechanisms emphasize exploitation and exploration efforts within manufacturers and in collaborations with upstream and downstream partners. The findings demonstrate the need to combine these mechanisms for digital servitization according to combinations that match each manufacturer’s traditional servitization phase: (1) initial phase - building and acquiring, (2) middle phase - learning, building and acquiring, and (3) advanced phase - learning and building.

Originality/value

This study reveals three operational capability development mechanisms, highlighting the parallel use of these mechanisms for digital servitization. It provides a holistic understanding of operational capability development mechanisms used by manufacturers by combining three theoretical perspectives (organizational learning, absorptive capacity, and network perspectives). The paper demonstrates that digital servitization requires the significant application of building and acquiring mechanisms to develop the requisite operational capabilities.

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

Purpose

The 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/approach

The 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.

Findings

The 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/implications

The 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 implications

Forward 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 implications

Forward 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/value

This 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.

Interplay between servitization and platforms: a longitudinal case study

Purpose

This paper aims to empirically explore the evolution of servitization and how platforms affect the transition between the stages of servitization.

Design/methodology/approach

The authors conducted an in-depth case study of a Chinese manufacturer (i.e. Haier) using a longitudinal design. Three rounds of data collection were conducted between 2014 and 2020. The authors carried out 50 semi-structured interviews and 11 workshops to collect data from senior and middle managers of Haier and its business partners.

Findings

The authors found that Haier’s servitization journey includes three stages (i.e. product-oriented solution, integrated solution and smart connected solutions) that evolve in the target of the services and the digital components of the solutions. Haier has also developed three types of platforms (i.e. service platform, supply chain platform and platform ecosystem) to support the implementation of servitization. The empirical evidence reveals that platforms can address the complexities that emerged when Haier implements the different stages of servitization as well as enable Haier to transition from one stage of servitization to the next.

Originality/value

This study enhances the current understanding of the evolution of servitization and the roles of digital technologies in the transition between the stages of servitization. It also provides empirical evidence regarding how the platform approach enables the development of servitization. By clarifying the interplay between servitization and platforms, this study provides guidelines for managers on how to develop platforms to both advance and benefit from servitization.

Achieving Circularity through Novel Product-Service Systems in the Mining Industry: An Opportunity for Circularity

The evolution toward sustainable mining can be achieved by implementing circular economies (CEs), and one way forward is via product-service systems (PSSs). However, applying PSSs in the mining industry is an area with little extant research. We seek to contribute to CE and sustainability research by proposing a model by which mining companies can achieve circularity through their suppliers: something which has not yet been explored. First, we present a critical literature review of published papers about the barriers and benefits in industries where servitization or PSS has been applied. We discuss barriers impeding PSS implementation in the mining industry, along with related concepts including CE and PSSs in digital technologies. With this study we hope to draw more discussion to the topic of PSSs in the mining industry and provide useful guidelines to academics and industry professionals for PSS implementation in mining: an important step toward circularity.

Uncertainty management in engineering-service development: the role of organisational capabilities

Purpose

Engineering-service (ES) development is characterised by high uncertainty, the management of which is crucial for the success of the offering during the provision of ESs. This paper studies suitable organisational capabilities to address different uncertainty types.

Design/methodology/approach

Based on conceptualisation of individual uncertainty types and organisational capabilities, this study investigated their empirical links through six case studies of ES development projects. The data consisted of 64 semi-structured interviews, 10 weeks of observational data and 166 supporting documents describing the projects.

Findings

The findings provide empirical evidence for four distinct uncertainty types (environmental, organisational, technical and relational uncertainty) and the organisational capabilities needed for addressing them. The authors identified unique dominant capabilities for each uncertainty type (commercialisation for environmental uncertainty, coordination for organisational and technical uncertainty, and relational capabilities for relational uncertainty), which were complemented with supporting capabilities, including project management and integration.

Originality/value

This study contributes to the service operations literature by merging previously separate research streams on uncertainty and organisational capabilities in ESs and servitization. Through this merge, this study offers a more coherent understanding by extending previously sporadic insights into specific links between individual uncertainty types and individual capabilities.

Patterns of business model innovation for advancing IoT platforms

Purpose

The emergence of Internet of Things (IoT) platforms in product companies opens up new data-driven business opportunities. This paper looks at the emergence of these IoT platforms from a business-model perspective.

Design/methodology/approach

The study applies a mixed method with two research studies: Study I–a cluster analysis based on a quantitative survey, and Study II–case studies based on qualitative interviews.

Findings

The findings reveal that there is no gradual shift in a company's business model, but in fact three distinct and sequential patterns of business model innovations: (1) platform skimming, (2) platform revenue generation and (3) platform orchestration.

Research limitations/implications

The results are subject to the typical limitations of both quantitative and qualitative studies.

Practical implications

The results provide guidance to managers on how to modify the components of the business model (value proposition, value creation and/or delivery and profit equation) in order to enable platforms to advance.

Social implications

As IoT platforms continue to advance, product companies achieve better performance in terms of productivity and profitability, and more easily secure competitive advantages and jobs.

Originality/value

The paper makes three original contributions: (1) it is the first quantitative study on IoT platforms in product companies, (2) identifies three patterns of business model innovations and (3) offers a first process perspective for understanding the sequence of these patterns as IoT platforms advance.

The roles of performance measurement and management in the development and implementation of business ecosystem strategies

Purpose

Performance measurement and management (PMM) systems have traditionally enabled strategy execution within and across firms. However, PMM have been criticized as overly static and deterministic and therefore inappropriate for emergent and dynamic contexts, such as those that characterize business ecosystems.The study aims to address the roles of organizational PMM practices in the development and implementation of business ecosystem strategies.

Design/methodology/approach

The authors carried out a qualitative, longitudinal study during 2016–2020 at a Japanese multinational technology corporation attempting to create an ecosystem strategy to expand its market and diversify its offering. The authors collected interview, observation and archival data, spanning the period from framing the initial strategy to establishing the ecosystem.

Findings

The process of developing and implementing the ecosystem strategy was emergent and highly iterative, rather than planned and linear, eventually requiring key decision-makers in the company to challenge some of their deeply held assumptions. PMM practices first acted as barriers to ecosystem development by promoting an excessive focus on revenue generation. Once modified, PMM helped capture, convey and reassess the ecosystem strategy. Performance targets, indicators and strategy maps were not just data gathering and reporting mechanisms but key means to express competing perspectives.

Practical implications

When developing an ecosystem strategy, managers should adopt a participatory and iterative approach, reviewing the complementary effects of various PMM tools at different points in time.

Originality/value

The study is among the first to provide an in-depth account of ecosystem strategy creation and implementation and to identify the diverse roles and effects of PMM practices in dynamic and complex contexts.

On the road to digital servitization – The (dis)continuous interplay between business model and digital technology

Purpose

The authors seek to understand the process of digital servitization as a shift of manufacturing companies from the provision of standard products and services to smart solutions. Specifically, the authors focus on changes in the business model (i.e. the value proposition, the value delivery system and the value capture mechanism) for digital servitization.

Design/methodology/approach

The authors examine a Chinese air conditioner manufacturer, Gree, who became the global leader with their smart solutions. These solutions included performance-based contracts underpinned by artificial intelligence (AI)-powered air conditioners that automatically adjust to environmental changes and are capable of remote monitoring and servicing thanks to its Internet of things (IoT) technology.

Findings

To successfully offer smart solution value propositions, a manufacturer needs an ecosystem value delivery system composed of suppliers, distributors, partners and customers. Once the ecosystem relationships are well aligned, the manufacturer gains value with multiple value capture mechanisms (i.e. efficiency, accountability, shared customer value and novelty). To arrive at this point, a manufacturer has to pass through different stages that are characterized by both discontinuous and continuous interplay between business models and digital technologies. At the beginning of each stage, new value propositions and value delivery systems are first discontinuously created and then enabled with digital technology. As a result, new value capture mechanisms are activated. Meanwhile, the elements of the existing business model are continuously improved.

Research limitations/implications

By combining process-perspective and business-model lenses, the authors offer nuanced insights into how digital servitization unfolds.

Practical implications

Executives can obtain insights into the business model elements, they need to change over the course of digital servitization and how to manage the process.

Originality/value

A longitudinal case study of a traditional manufacturer that has achieved stellar success through digital servitization business models development.

A complexity management approach to servitization: the role of digital platforms

Purpose

This study aims to enhance the theoretical foundations of servitization research by establishing a theoretical connection with complexity management. The authors develop a conceptual framework to describe complexity management mechanisms in servitization and digital platforms' specific role in allowing synergies between complexity reduction and absorption mechanisms.

Design/methodology/approach

A theory adaptation approach is used. Theory adaptation introduces new perspectives and conceptualization to the domain theory (servitization, with a focus on the role of digital platforms) by informing it with a method theory (complexity management).

Findings

This study provides four key contributions to the servitization literature: (1) connecting the servitization and complexity-management terminologies, (2) identifying and classifying complexity-management mechanisms in servitization, (3) conceptualizing digital platforms' role in servitization complexity management and (4) recognizing digital platforms' complexity-management synergies.

Originality/value

This study highlights that by using digital platforms in servitization and understanding the platform approach more thoroughly, companies can gain new capabilities and opportunities to manage and leverage complexity.

Boundary negotiations: a paradox theoretical approach for efficient and flexible modular systems

Purpose

The purpose of this paper is to explore the interplay between firm boundary decisions and the management of both efficiency and flexibility and the implications this has for modular design in the provision of advanced services.

Design/methodology/approach

A single case study in the defence industry employs semi-structured interviews supplemented by secondary data. Data are analysed using thematic analysis.

Findings

The findings provide a process model of boundary negotiations for the design of efficient and flexible modular systems consisting of three phases; boundary ambiguity, boundary defences and boundary alignment.

Practical implications

The study provides a process framework for boundary negotiations to help organisations navigate the management of both-and efficiency and flexibility in the provision of advanced services.

Originality/value

Drawing upon modularity, paradox and systems theory, this article provides novel theoretical insight into the relationship between firm boundary decisions and the management of both-and efficiency vs. flexibility in the provision of product upgrade services.

Reconciling and reconceptualising servitization research: drawing on modularity, platforms, ecosystems, risk and governance to develop mid-range theory

Purpose

This research bridges disparate research on servitization, namely product–service systems (PSS) and integrated solutions (IS), to provide valuable insights for the progression of the field. It acts as a reconciliation of these research streams and offers a reconceptualised agenda incorporating recent research on platforms, ecosystems, modularity, risk and governance as key conceptual themes to synthesise and build theory.

Design/methodology/approach

This is a conceptual, theory development article focused on advancing thinking on servitization by identifying systematic and theoretically informed research themes. It also proposes future research opportunities to advance theoretical contributions and practical implications for servitization research.

Findings

By reviewing and synthesising extant PSS and IS research, this article identified five core themes – namely modularity, platforms, ecosystems, risks and governance. The importance of these five themes and their linkages to PSS and IS are examined and a theoretical framework with a future research agenda to advance servitization is proposed.

Originality/value

This paper considers the similarities and differences between PSS and IS in order to develop a theory and to reconcile formerly disparate research efforts by establishing linkages between core themes and identifying valuable synergies for scholars. The importance of the core themes and current gaps within and across these themes are shown, and a mid-range theory for servitization is positioned to bridge the servitization-related PSS and IS communities.

Servitization for consumer products: an empirical exploration of challenges and benefits for supply chain partners

Purpose

To increase sustainability of their products and enable new business opportunities, manufacturers explore servitization in consumer markets. Yet, the literature has not addressed this development. This study is one of the first to investigate the challenges and benefits for manufacturers and their supply chains when engaging in business-to-consumer (B2C) servitization.

Design/methodology/approach

The study explores two unique cases of manufacturers of complex consumer products that aim to extend their service offerings to the end-users. Data were collected via semi-structured interviews, observations and secondary data.

Findings

First, the authors identify two factors as prerequisites for a servitized set-up: internal collaboration within the manufacturer and product characteristics (e.g. product complexity). Second, the authors identify the network as an important factor for B2C servitization, which includes the triadic set-up between manufacturer, installer and consumer. Third, the authors identify moderating institutional settings, such as regulations and consumer needs.

Originality/value

This research elaborates existing B2B servitization theory into an empirically informed theoretical framework for B2C contexts. It expands the view on servitization by introducing the network perspective to service a large number of geographically dispersed customers.

Exploring digital servitization trajectories within product–service–software space

Purpose

This study shows various pathways manufacturers can take when embarking on digital servitization (DS) journeys. It builds on the DS and modularity literature to map the strategic trajectories of product–service–software (PSSw) configurations.

Design/methodology/approach

The study is exploratory and based on the inductive theory building method. The empirical data were gathered through a workshop with focus groups of 15 servitization manufacturers (with 22 respondents), an on-site workshop (in-depth case study), semi-structured interviews, observations and document study of archival data.

Findings

The DS trajectories are idiosyncratic and dependent on design architectures of PSSw modules, balancing choices between standardization and innovation. The adoption of software systems depends on the maturity of the industry-specific digital ecosystem. Decomposition and integration of PSSw modules facilitate DS transition through business model modularity. Seven testable propositions are presented.

Research limitations/implications

With the small sample size from different industries and one in-depth case study, generalizing the findings was not possible.

Practical implications

The mapping exercise is powerful when top management from different functional departments can participate together to share their expertise and achieve consensus. It logs the “states” that the manufacturer undergoes over time.

Originality/value

The Digital Servitization Cube serves as a conceptual framework for manufacturers to systematically map and categorize their current and future PSSw strategies. It bridges the cross-disciplinary theoretical discussion in DS.