Digital servitization as Business Model Innovation: an explorative study on the role of absorptive capacity

Abstract

Frame of the research: Firms often face the digitalization paradox. Digital servitization may be the key to unlocking the value of investing in digital technology. More research is needed on the enabling factors of such processes. Notably, the extant literature suggests that dynamic capabilities can play a role. Hence, we suggest that ACAP, as a particular type of dynamic capability, positively influences the relationship between Industry 4.0 adoption and digital servitization.Purpose of the paper: The study investigates how the firm's absorptive capacity allows to appropriate value from Industry 4.0 by enabling digital servitization.Methodology: A single case study based on semi-structured interviews with key informants.Findings: The business model innovation process towards digital servitization started with the value proposition to affect the value creation and value capture dimensions. Significant changes exist in product/service development, human resources competencies, and business relationships with customers and suppliers. The firm's absorptive capacity represents a significant enabler of such a process.Research limits: A single case study suffers from limitations related to the external validity of results, which may be overcome by a multiple case study. Besides, increasing the number of interviews and collecting data from other actors (e.g. customers, suppliers, etc.) would allow a broader view.Practical implications: Developing absorptive capacity might help manufacturing firms in overcoming the digitalization paradox. Managers should encourage exploratory, transformative, and exploitative learning that can facilitate the provision of value-added services that allow the firm to appropriate value by enhancing its bargaining power and expanding its market. Originality of the paper:The study primarily contributes to the digital servitization literature by providing empirical evidence on its enabling factors. It also contributes to the knowledge management field and the literature on absorptive capacity.