Servitization and Competitive Advantage: The Importance of Organizational Structure and Value Chain Position

OVERVIEW: Servitization represents a business-model change and organizational transformation from selling goods to selling an integrated combination of goods and services. Competitive advantage is one outcome of this shift. During servitization, companies follow stages to realize services as an opportunity to differentiate from goods and achieve higher customer satisfaction. This study analyzes this transition from base, intermediate, and advanced services by presenting results from 102 senior executives in multinational companies. Our results suggest increasing interest in service-led strategies in manufacturing companies. The results also show that increasing differentiation and high customer satisfaction are fundamental to achieving competitive advantage and superior performance with services. The analysis also indicates the importance of a company's position in the value chain and the organizational structure it selects to support services in successful servitization.

[1]  A. Neely,et al.  Only the Brave: Product Innovation, Service Business Model Innovation, and Their Impact on Performance , 2016 .

[2]  T. Baines,et al.  Service Implementation in manufacturing firms: Strategy, economics and practice , 2015 .

[3]  J. Wincent,et al.  Mastering the Transition to Product-Service Provision: Insights into Business Models, Learning Activities, and Capabilities , 2014 .

[4]  V. Martinez,et al.  Achieving customer satisfaction through integrated products and services: : An exploratory Study , 2013 .

[5]  J. Wincent,et al.  Non-linear relationship between industrial service offering and sales growth: The moderating role of network capabilities , 2013 .

[6]  Oscar F. Bustinza,et al.  Supply and demand chain management: the effect of adding services to product offerings , 2013 .

[7]  B. Looy,et al.  Servitization: Disentangling the Impact of Service Business Model Innovation on Manufacturing Firm Performance , 2013 .

[8]  Michael A. Cusumano,et al.  Services and the Business Models of Product Firms: An Empirical Analysis of the Software Industry , 2013, Manag. Sci..

[9]  Bart van Looy,et al.  Servitization: Disentangling the Impact of Service Business Model Innovation on Manufacturing Firm Performance , 2013 .

[10]  A. Chidlow,et al.  Exploring the effects of international sourcing on manufacturing versus service firms , 2012 .

[11]  Ian Miles,et al.  Service innovation in manufacturing firms: Evidence from Spain , 2012 .

[12]  Rajkumar Roy,et al.  Operations strategy for the effective delivery of integrated industrial product‐service offerings , 2011 .

[13]  Oscar F. Bustinza,et al.  Outsourcing, Competitive Capabilities and Performance: An Empirical Study in Service Firms , 2010 .

[14]  Veronica Martinez,et al.  Challenges in transforming manufacturing organisations into product‐service providers , 2010 .

[15]  B. Edvardsson,et al.  Match or Mismatch: Strategy-Structure Configurations in the Service Business of Manufacturing Companies , 2010 .

[16]  Tim Baines,et al.  The servitization of manufacturing: A review of literature and reflection on future challenges , 2009 .

[17]  L. Araujo,et al.  Service, services and products: rethinking operations strategy , 2009 .

[18]  A. Roth,et al.  INSIGHTS INTO SERVICE OPERATIONS MANAGEMENT: A RESEARCH AGENDA , 2003 .

[19]  A. Davies.  Moving base into high-value integrated solutions: a value stream approach , 2004 .

[20]  M. Porter,et al.  UK Competitiveness: moving to the next stage , 2003 .

[21]  R. Wise,et al.  Go Downstream: The New Profit Imperative in Manufacturing , 1999 .

[22]  David J. Morrison,et al.  The Profit Zone: How Strategic Business Design Will Lead You to Tomorrow's Profits , 1997 .

[23]  S. Vandermerwe,et al.  Servitization of business : Adding value by adding services , 1988 .