Context matters: how internal and external factors impact servitization

Abstract

The study investigates how internal and external context factors impact a manufacturer’s servitization process (i.e. the strategic transformation from competing through products towards competing through services). A theoretical framework was developed that integrates a multi-stage conceptualisation of servitization with a focus on the wide range of internal and external context factors that support or oppose the transformation. The study draws on the collective experiences of 25 senior executives from 17 servitizing small- and medium-sized manufacturers, using a focus group-based enquiry method. The findings recognise servitization as a multi-stage transformation process with each stage being exposed to different context factors. The findings identify a wide range of context factors and show how their specific impact varies depending on the manufacturer’s servitization stage. Several theoretical and practical implications are provided.

Keywords:

• Servitization
• transformation
• organisational change
• organisational context

Notes

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

1 Ziaee Bigdeli and Baines (2017) use the terms ‘exploration’ and ‘exploitation’ to describe the two end-points of a single specific servitization venture (following Faems et al. 2012; Sharma and Salvato 2011). The same terms are also used in the organisational-level ambidexterity discourse (He and Wong 2004; March 1991) which describes how an organisation that engages in various different ventures (which could be at different development stages) may be required to engage in exploration and exploitation simultaneously. The section on future research opportunities (Section 6.4) will discuss the implications of the manufacturer simultaneously engaging in two or more servitization ventures, which will also consolidate the venture-level and organisation-level discourses for the servitization context.

2 A discussion about the extent to which the SME-based findings can be generalised is provided in the Limitations section (6.3).

3 The literature guidance on panel sizes varies with suggestions ranging from seven or more members (Dalkey and Helmer 1963), ten to 50 (Turoff 1970) and up to 80 members (Rowe and Wright 1999).

4 The arrow sizes in the figures illustrate the relative emphasis the expert panel put on to that specific dimension at that stage (based on the researchers’ interpretation).

Additional information

Funding

This work was supported by the European Union’s Horizon 2020 research and innovation programme under the Marie Skłodowska-Curie grant agreement No. 721909, and the UK’s Economic and Social Research Council (ESRC) grant Ref ES/P010148/1 ‘Pathways towards Servitization: A trans-national study of Organisational Transformation.

Notes on contributors

Jekaterina Dmitrijeva

Jekaterina Dmitrijeva is a Doctoral Researcher at the Advanced Services Group, Aston Business School. Her research centres on servitization in manufacturing organisations. As an Early Stage Researcher in an EU funded Circular European Economy Innovative Training Network (Circ€uit) she explores the organisational development from a product-focussed to a service-focussed business model, aiming to identify organisational transformation pathways and evaluate the experiences of servitization transitions.

Andreas Schroeder

Andreas Schroeder, PhD, is a Senior Lecturer in Information Systems at Aston University’s Advanced Services Group. Andreas’s research focuses on understanding how businesses select and acquire the IT systems they need, and then how to integrate them into the business to get the most value from them. He works with manufacturers to explore how digitalisation, big data and the Internet of Things can support strategic change and the adoption of advanced services. His research has been published in different journals including Production Planning & Control, Decision Support Systems, International Journal of Production Economics, and Journal of Business Research.

Ali Ziaee Bigdeli

Ali Ziaee Bigdeli, PhD, is a Senior Lecturer in Industrial Service Innovation at The Advanced Services Group at Aston Business School. His interests lie in the organisational change and business model innovation brought about when organisations move towards providing capabilities rather than just selling products on a transactional basis. He is extensively engaged with both multinational and SME manufacturers to understand servitization in practice, and help the acceleration of the adoption of advanced services. His research has been published in the leading management journals including International Journal of Operations & Production Management, Journal of Business Research, and International Journal of Production Economics.

Tim Baines

Tim Baines, PhD, is a Professor of Operations Strategy and Executive Director of the Advanced Services Group at Aston University. He is a leading international authority on servitization and spends much of his time working hands-on with both global and local manufacturing companies to understand servitization in practice and help to transform businesses. His book Made to Serve described as, ‘Essential reading for any companies or executives looking to explore this option for their business’ provides a practical guide to servitization, based on in-depth research with leading corporations such as Xerox, Caterpillar, Alstom and MAN Truck & Bus UK.