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

Exploring the landscape of digital servitization: A systematic review

Background

Digital servitization is a strategic transformation where companies adopt a service-focused approach in response to the prevailing trend of digitalization. Utilizing digital technology, businesses manage product and service operations and develop new value propositions. Further research into digital servitization is essential for maintaining competitiveness and meeting evolving market demands globally. This study aims to comprehend the evolution of digital services from theoretical and practical viewpoints and examines how these challenges are tackled.

Methods

Utilizing a systematic literature review methodology, the study adopts the PRISMA approach to identify 26 pertinent articles from a pool of 340 papers obtained through a SCOPUS database search. These papers were published between 2019 and 2024 and were retrieved using the keywords ('digitalization OR digital AND servitization OR servitization'). The selection process involved scrutinizing titles, abstracts, and keywords based on predefined criteria.

Results

The findings reveal that current digital servitization research emphasizes five determinant variables: digitization, servitization, manufacturing servitization, process innovation, and product innovation. Additionally, response variables influenced by digital servitization were identified, including firm competitiveness, firm performance, financial performance, firm profitability, and sustainable performance.

Discussion

The results of this review point to inconsistencies, underscoring the necessity for additional research into the factors influencing digital servitization across companies beyond the manufacturing sector. This highlights the importance of gaining a deeper understanding of digital servitization strategies and their impacts across various industries. By expanding the scope of research to include a broader range of sectors, researchers can provide more comprehensive insights into the complexities and nuances of digital servitization adoption. This broader perspective enables a more thorough examination of the challenges and opportunities associated with implementing digital servitization strategies, ultimately contributing to a richer understanding of its implications for businesses across diverse industries.

Collaborative servitization in service-oriented company: The case study of telco company

There is a growing interest in the subject of product-service system (PSS) and collaborative servitization in academia and practice. However, the focus is on exploring the growth of manufacturing companies without specifically analyzing the growth of service companies in applying PSS. There are companies, especially in the telco industry, that expand their service business to complex bundles of products and services. The paper investigates PSS in the service company and the role of collaboration in different PSS development phases: idea generation, development and go to market phase. The study adopted case-based research conducted in international Telco organization. The research demonstrates how a company creates and commercializes integrated packets of products and services, it identifies partners company works with and the benefits and challenges of their cooperation. The study addresses collaboration with customers and identifies five different customer profiles according to their openness to participate in the development of PSS. The study highlights the importance of (1) collaboration models, (2) customer involvement, and (3) strategic focus in successful application of collaborative servitization. The findings complement the literature for collaborative servitization and offer concrete input for companies in terms of how to better organize business, profit from collaboration models and gain market advantage.

Digital technology integration in business model innovation for carbon neutrality: An evolutionary process model for SMEs

This study delves into the strategies employed by small and medium-sized enterprises (SMEs) to embed digital technology into their business models, aiming to reach carbon neutrality. We offer a comprehensive analysis of five high technology SMEs, unveiling an evolutionary process model that highlights their journey toward integrating technology. The integration process is delineated into three progressive stages. Initially, digital technology is seen as an 'enabler' that promotes the birth of an innovative business model, essentially transforming the mechanisms of value creation, delivery, and capture. As SMEs evolve to an intermediate stage, digital technology becomes a 'disruptor', reshaping and reinventing the business model in terms of how value is created, delivered, and captured. Entering the maturity stage, digital technology is elevated to the role of 'expertise', leading to a sophisticated business model that refines and optimizes these aspects of value. The influence of these business model innovations on carbon neutrality is complex and varies distinctly with each stage, reflecting the dynamic interplay between digital technology and business model evolution.

The role of digital knowledge servitization in supply chain management

Purpose

This paper aims to contribute to overcoming the gap existing in the supply chain literature related to digital servitization by bridging digital servitization with knowledge management and identifying the rise of digital knowledge servitization as a driver for changes in the supply chain business model towards open innovation.

Design/methodology/approach

The study follows an inductive grounded theory approach for theory building. To analyse the impact of digital knowledge servitization, in-depth interviews of managers in the main business units of the Volvo Group supply chain ecosystem were carried out.

Findings

The results show how the digital servitization process affects the supply chain business model, highlighting the central role of knowledge in the service ecosystem and the rise of the theoretical concept of digital knowledge servitization. In particular, through the Innovation Lab (Volvo Group) study, the paper contributes to bringing together the theoretical knowledge-based view of servitization with the digital servitization concept, which demonstrates the role of this combined perspective in the transformation of the supply chain; this is carried out by introducing a new business model based on open innovation in inbound and outbound processes.

Practical implications

The research offers interesting insights from a managerial perspective, as increasingly advanced and complex digital solutions require shorter times in supply chain management (SCM). Companies need to be able to quickly manage information and knowledge flows deriving from internal and external interactions and involvement with external actors upstream and downstream of the supply chain ecosystem. Therefore, the digital knowledge servitization of the supply chain also highlights implications for managers in terms of human resources management.

Originality/value

The novel research goal is to contribute to the supply chain literature by integrating the digital servitization with the knowledge view and analysing the impact on the inbound and outbound supply chain through the introduction of an open innovation business model.

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.

Digital orientation, digital maturity, and digital intensity: determinants of financial success in digital transformation settings

Purpose

This study aims to investigate three relevant antecedents of digital transformation (digital orientation, digital intensity and digital maturity) and their influences on the financial success of companies.

Design/methodology/approach

Building on the strategic management and digital transformation literature, five hypotheses are developed to find the relationships between these antecedents and financial success.

Findings

Digital orientation and digital intensity alone do not contribute to the financial success of companies. Specifically, digital intensity serves as a negative moderator between digital orientation and financial success, meaning that it reduces the performance effects of digital orientation. Digital maturity acts as a mediator between digital orientation and the financial success of companies and between digital intensity and the financial success of companies.

Originality/value

This research contributes to the literature on strategic management and digital transformation by providing a further understanding of three relevant antecedents of digital transformation (digital orientation, digital intensity and digital maturity) and how they should be positioned alongside digital transformation settings to achieve financial success.

From After-Sales to Advanced Services: A Network Analysis on the Impacts of Digital Servitization Evolution

The B2B context has experienced a push toward digital servitization (DS), i.e., the development of services by means of digital technologies. There are three levels of DS: (1) product provision, (2) after-sale servicing, and (3) advanced services taking after-sales to the next level. At level 3, DS evolves from a product and service-oriented strategy to a service-centric one. The literature has acknowledged the changes provoked by levels 1 and 2 of DS. Yet, further changes at level 3 still have not been explored. This research aims to understand the impact of DS’s evolution after the DS setup, with an intra- and interorganizational focus. To reach this aim, the case of Beta, an Italian mechatronic manufacturer implementing IIoT-based DS, is analyzed. The adopted framework is the ‘developing’, ‘producing’, ‘using’ (DPU) framework, formulated within the industrial marketing and purchasing (IMP) approach. Results are summarized in three propositions, showing how: (1) DS complexity unfolds intra- and interorganizationally and is gradually embedded in the three settings of the framework; (2) integration of settings and resources becomes essential; and (3) processes of resource procurement, development, and integration allow the evolution toward a service platform. Theoretical and managerial implications are provided.

Start-Up’s Road to Disruptive Innovation in the Digital Era: The Interplay Between Dynamic Capabilities and Business Model Innovation

The emergence and infusion of digital technologies bring greater chances for start-ups to conduct disruptive innovation through digital entrepreneurship. Despite the existed business practices, the happening mechanism of start-up’s disruptive innovation in the digital economy context remains unclear. This study aims to understand the evolutionary mechanism and fulfillment path start-ups’ disruptive innovation in the digital era. The longitudinal case study is conducted for a Chinese Internet start-up that successfully launched disruptive innovation under the digital economy background. Adopting a process perspective, this study analyzes the evolutionary phases of digital disruptive innovation. Moreover, this study identifies the digital technologies adoption, dynamic capabilities deployment, and business model innovation as the key pillars, and their interactions. Finally, this study induces and proposes its evolution mechanism and fulfillment path models. This study enriches the research scope of disruptive innovation and digital entrepreneurship. This study can offer theoretical guidance for the start-ups’ disruptive innovation in the digital era, and practical implications for implementing a digital catching-up strategy.

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.

Data analytics capability and servitization: the moderated mediation role of bricolage and innovation orientation

Purpose

Despite the potential influence of data analytics capability on servitization, the understanding of the underlying mechanisms of this influence remains unclear. This study aims to explore how data analytics capability affects servitization by examining the mediation effect of bricolage and the conditional role of innovation orientation.

Design/methodology/approach

This study employs the moderated mediation method to examine the proposed research model with archival data and multiple-respondent surveys from 1,206 top managers of 402 manufacturing firms in the Yangtze River Delta area in China.

Findings

Bricolage partially mediates the positive relationship between data analytics capability and servitization, and innovation orientation positively moderates this effect.

Practical implications

Manufacturers can leverage bricolage to materialize data analytics capability for servitization. Manufacturers should also pursue an innovation orientation to fully glean the benefits of bricolage in transforming data analytics capability into servitization.

Originality/value

This study opens the black box of how data analytics capability affects servitization by revealing the underlying mechanism of bricolage and the boundary condition role of innovation orientation for this mechanism. It offers valuable insights for practitioners to leverage data analytics to improve servitization through developing bricolage and cultivating a culture of innovation orientation.

Digital servitization strategies for SME internationalization: the interplay between digital service maturity and ecosystem involvement

Purpose

The purpose of this study is to understand how digital servitization enables the process of internationalization for industrial SMEs.

Design/methodology/approach

The present study has adopted an exploratory multiple case study, conducting a total of 40 interviews in a two-phased approach to data collection. The first phase consisted of exploratory interviews with twenty-six industrial SMEs connected to the manufacturing industry in Sweden and Finland. Then, six SMEs were selected in the second phase to participate in additional in-depth interviews.

Findings

First, this study identifies three gradual enabling phases concerned with the digital service maturity of SMEs consisting of digital awareness, digital service innovation and digital service mass customization. Second, the three interdependent phases of ecosystem knowledge synergy, ecosystem integration and ecosystem value co-creation were identified to improve ecosystem involvement. Finally, a process framework has been developed for SME internationalization consisting of a digital servitization innovation strategy, a digital servitization ecosystem strategy and a digital servitization scaling strategy.

Originality/value

The present research contributes to how digital servitization enables SME internationalization by demonstrating how the development of digital service offerings and ecosystem partnerships supports the internationalization process. This research extends the literature by proposing a process framework for the digital-servitization-enabled internationalization of SMEs. This process perspective provides a richer explanation of the complex interplay between servitization, digitalization and ecosystems choices, which supports the expansion into international markets.