Worth the risk? The profit impact of outcome-based service offerings for manufacturing firms

Korkeamäki, Lauri; Kohtamäki, Marko; Parida, Vinit

doi:10.1016/j.jbusres.2021.03.048

Cited by 31 publications

(13 citation statements)

References 102 publications

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“…The initial studies defined the PSS concept as a marketable combination of products and services that, together, fulfill customer needs economically and sustainably [41]. Servitization is concerned with transitioning from the long-established practice of selling products and basic support services to providing advanced combinations of products and services so that greater value is procured for customers by, for example, providing availability [6].…”

Section: A Pss Business Modelmentioning

confidence: 99%

See 1 more Smart Citation

Value Leakage in Product–Service System Provision: A Business Model Alignment Perspective

Reim

Lenka

Parida

et al. 2024

IEEE Trans. Eng. Manage.

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To stay competitive, manufacturing companies offer product-service systems (PSS) to avoid commoditization of their products. The potential to create value through PSS offerings lies in a company's ability to successfully implement the PSS business model. However, many companies are unable to realize the benefits because PSS represents significant changes to all the business model elements, which comprise value creation, value delivery, and value capture. This leads to misalignment among the business model elements, which is a topic of interest within PSS and business model literatures. This article aims to provide empirical insights into the business-model-element alignment problems and conceptualize their consequences, which manufacturing companies face during PSS implementation. This article utilizes an abductive multicase study of three Swedish manufacturing companies with long-term experience of PSS provision to provide novel insights by identifying six alignment problems that companies face as a consequence of the interaction among the three business model elements. Furthermore, we contribute to both the PSS and business model literature by conceptualizing the consequences of business model element alignment problems, explaining the three value leakages that occur as a result of inappropriate resource and capability utilization, unattractive offer configurations, and inefficient service network processes in PSS provision.

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Section: A Pss Business Modelmentioning

confidence: 99%

“…The research on PSS is also closely related to the literature on business-to-business (B2B) marketing and solution business models, which also highlight the implementation of service components and digital technology as a promising way to develop business opportunities [6], [18], [42].…”

Section: A Pss Business Modelmentioning

confidence: 99%

Value Leakage in Product–Service System Provision: A Business Model Alignment Perspective

Reim

Lenka

Parida

et al. 2024

IEEE Trans. Eng. Manage.

Self Cite

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“…Notably, Parida, Vinit not only holds a position at the Lulea University of Technology, Sweden, but he has also worked as a visiting professor at the University of Vaasa, Finland. Therefore, he cooperated deeply with Kohtamaki, Marko, a professor at the University of Vaasa, Finland; they jointly published ten articles [4,[89][90][91][92][93][94][95][96][97] on the servitization of manufacturing. In addition, Kohtamaki, Marko, University of Vaasa, Finland, Parida, Vinit, Lulea University of Technology, Sweden, and Gebauer, Heiko, Swiss Federal Institute of Aquatic Science & Technology, Switzerland, have a close cooperative relationship with each other.…”

Section: The Leading Authorsmentioning

confidence: 99%

Bibliometric Method for Manufacturing Servitization: A Review and Future Research Directions

Chen

et al. 2022

Sustainability

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To gain sustainable development, it is a trend that manufacturing companies are change the value chain from manufacturing-centric to service-centric. Therefore, the capability of the manufacturing service is as significant as the production ability of enterprises, which reflects the supply chain management (SCM), flexible production, production efficiency, and other indicators of the enterprises. It is the first paper to discuss the sustainability of service-oriented manufacturing using bibliometric analysis. It derives a detailed review and future outlook on the development of manufacturing servitization, indicating the research directions for future development, and provides a valuable reference for researchers in related directions. The bibliometric analysis discusses countries or regions, research areas, authors, keywords, institutions, and journals based on the literature data from the Web of Science (WoS). The results show that research on manufacturing services has gradually received attention since its inception and has become popular since 2008. The papers published from 2008 to 2021 account for 77.62%. The USA is the most studied country on this topic, followed by China and the UK. The International Journal of Production Research regarding the most quantity of articles, and Beihang University is the most influential institution in this field. The largest amount of articles published in the area of “business and economics”, amounting to 1565 articles. In recent years, the main research areas included “Industry 4.0”, “cloud manufacturing (CMfg)”, “Internet of Things (IoT)”, “big data” and “services innovation”. Finally, “digital and intelligent manufacturing” and “product-service systems” are potential research directions for the future.

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“…Extant studies on digital servitization have found that manufacturers need to reposition in the ecosystem (Kohtam€ aki et al, 2019), alter their capabilities (Coreynen et al, 2020), change their intra-and interfirm processes (Markovic et al, 2020;Sklyar et al, 2019), and collaborate with knowledge-intensive business service firms (Bustinza et al, 2020b) to enable the transition and achieve both economic and strategic benefits (Vendrell-Herrero et al, 2017). Moreover, studies have suggested managerial sayings (Korkeam€ aki et al, 2021) and doings as practices (Kohtam€ aki et al, 2018(Kohtam€ aki et al, , 2021Palo et al, 2019) to manage this strategic transition. For instance, executives' speeches and public statements steer manufacturers' actual doings, such as investment decisions, acquisitions, or resourcing, regarding new solution development Kohtam€ aki et al, 2021).…”

Section: Theoretical Background 21 Digital Servitization and Smart Solution Development In Manufacturing Companiesmentioning

confidence: 99%

“…In search of higher economic returns and competitive advantage, equipment manufacturers have engaged in delivering a variety of smart solutions to extend their core offerings; a strategic transition acknowledged as digital servitization (Sklyar et al, 2019;Paschou et al, 2020;Tronvoll et al, 2020). Manufacturers develop smart solutions, defined as bundles of products, services, and software systems, to cocreate higher customer value to enable industrial clients to gain productivity leaps in their business fields (Korkeam€ aki et al, 2021). To achieve the benefits of smart solutions despite increasing competition, manufacturers have to improve managerial decision-making processes and routines of smart solution development (SSD) (Porter and Heppelmann, 2014;Kohtam€ aki et al, 2020).…”

Section: Introductionmentioning

confidence: 99%

Unfolding the simple heuristics of smart solution development

Huikkola

Kohtamäki

Rabetino

et al. 2021

JOSM

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PurposeThe present study intends to foster understanding of how a traditional manufacturer can utilize the “simple rules” approach of managerial heuristics to facilitate its smart solution development (SSD) process.Design/methodology/approachThe study uses an in-depth single case research strategy and 25 senior manager interviews to understand the application of simple rules in smart solution development.FindingsThe findings reveal process, boundary, preference, schedule, and stop rules as the dominant managerial heuristics in the case and identify how the manufacturer applies these rules during the innovation process phases of ideation, incubation, transformation, and industrialization for attaining project outcomes.Research limitations/implicationsThe study contributes to the new service development (NSD) literature by shedding light on simple rules and how managers may apply them to facilitate SSD. The main limitations stem from applying the qualitative case study approach and the interpretative nature of the study, which produces novel insights but prevents direct generalization to other empirical cases.Practical implicationsThe resulting framework provides guidelines for managers on how to establish formal and clear simple rules that enable industrial solution providers to approach decision-making in smart solution development in a more agile manner.Originality/valueThe study comprises one of the first attempts to investigate managerial heuristics in the context of SSD and puts forward a plea for further NSD research applying psychological conceptualizations to enrich the simple rules perspective.

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Worth the risk? The profit impact of outcome-based service offerings for manufacturing firms

Cited by 31 publications

References 102 publications

Value Leakage in Product–Service System Provision: A Business Model Alignment Perspective

Value Leakage in Product–Service System Provision: A Business Model Alignment Perspective

Bibliometric Method for Manufacturing Servitization: A Review and Future Research Directions

Unfolding the simple heuristics of smart solution development

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