Servitization as reinforcement, not transformation
Abstract
Purpose
The purpose of this paper is to explain why product-centric manufacturers utilize advanced services not as vehicles of transformation, but of reinforcement, to strengthen their established business model logic based on selling products and basic product-related services.
Design/methodology/approach
The empirical basis of this study relies on an in-depth case study of a globally operating manufacturer of industrial pumps and related services. The data includes 31 interviews conducted over several years of in-depth collaboration with the studied firm.
Findings
Product-centric manufacturers utilize advanced services as engagement platforms to facilitate the external and internal engagement of the actors and the resources controlled by them. Externally, advanced services facilitate access to customer decision makers and insights into their latent needs. Internally, advanced services help the manufacturer to more effectively leverage resources that reside within its different organizational units. Ultimately, in leveraging advanced services as engagement platforms, the manufacturer seeks to boost activities with the greatest immediate impact on its market performance: the sale of products and basic product-related services.
Practical implications
The study explains why managers should invest into development of advanced services even if such services contribute only marginally to the manufacturer’s direct revenues and profits.
Originality/value
This study contributes to development of an alternative explanation of servitization that departs from the current paradigmatic assumptions in the field.
Keywords
Acknowledgements
The authors would like to express their gratitude to the individuals of the case firm for sharing their insights and allowing us unique access to the organization. Furthermore, the authors would like to thank Ecaterina Puricel, Boris Battistini, and Pius Baschera for their collaboration and support throughout the course of this project. The feedback provided by the journal editors and the three anonymous reviewers were tremendously helpful in shaping this paper to its present form. Also, the authors are indebted to Elina Jaakkola for her constructive comments. Earlier versions of this manuscript were presented at the Academy of Management Annual Meeting, Vancouver, Canada, 2015; the European Marketing Academy Conference, Oslo, Norway, 2016; as well as the R&D Management Conference, Cambridge, UK, 2016. Onur Saglam and Fredrik Hacklin gratefully acknowledge the support by the Commission for Technology and Innovation (Grant No. 13872.1).
Citation
Salonen, A., Saglam, O. and Hacklin, F. (2017), "Servitization as reinforcement, not transformation", Journal of Service Management, Vol. 28 No. 4, pp. 662-686. https://doi.org/10.1108/JOSM-05-2016-0121
Publisher
:Emerald Publishing Limited
Copyright © 2017, Emerald Publishing Limited