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Manufacturing companies undergo a transformative journey in digital servitization, necessitating strategic, tactical, and operational shifts. The existing literature outlines the best practices on this process and examines challenges and opportunities through qualitative empirical evidence. We enrich the investigation through a quantitative explanatory research approach, employing a survey targeting manufacturing companies from multiple countries. Analyzing the responses using cluster analysis, we found three business typologies with specific behaviors related to digital servitization: digital experimentalists, strategic pioneers, and digital servitization novices. This research contributes valuable insights into the varied behaviors adopted by manufacturing firms in navigating the digital servitization landscape.

PurposeThis research aims to identify, examine and evaluate barriers to the adoption of digital servitization in manufacturing firms in the case of the Sri Lankan manufacturing sector and analyze the inter-relationships among digital servitization barriers.Design/methodology/approachBased on the comprehensive literature review, 13 barriers were identified. The grey decision-making trial and evaluation laboratory (grey-DEMATEL) approach was used to uncover and analyze the relationships among barriers in terms of their overall influence and dependencies.FindingsA prominent barrier to the success of adopting digital servitization in the Sri Lankan manufacturing sector is the lack of digital strategy in developing activities related to the design of digital service packages, organizational structures and processes. Supply chain integration is the most influential factor, which plays an important role in developing a competitive advantage by encouraging innovation process capabilities in servitized companies.Practical implicationsIndustry practitioners can develop guidelines for adopting digital servitization practices based on the importance and interdependencies of different barriers and thereby prioritize projects within a program of digital servitization adoption in their organizations.Originality/valueResearch studies on barriers to digital servitization are limited to exploratory nature and have adopted mainly the qualitative approach, such as in-depth interviews. No empirical study has investigated the inter-relationships among digital servitization adoption barriers in the manufacturing sector. This study provides a holistic view of different barriers to the adoption of digital servitization in the manufacturing sector as a basis for developing comprehensive digital servitization strategies to manage and leverage complexity in digital transformation.

PurposeThis paper aims to contribute to overcoming the gap existing in the supply chain literature related to digital servitization by bridging digital servitization with knowledge management and identifying the rise of digital knowledge servitization as a driver for changes in the supply chain business model towards open innovation.Design/methodology/approachThe study follows an inductive grounded theory approach for theory building. To analyse the impact of digital knowledge servitization, in-depth interviews of managers in the main business units of the Volvo Group supply chain ecosystem were carried out.FindingsThe results show how the digital servitization process affects the supply chain business model, highlighting the central role of knowledge in the service ecosystem and the rise of the theoretical concept of digital knowledge servitization. In particular, through the Innovation Lab (Volvo Group) study, the paper contributes to bringing together the theoretical knowledge-based view of servitization with the digital servitization concept, which demonstrates the role of this combined perspective in the transformation of the supply chain; this is carried out by introducing a new business model based on open innovation in inbound and outbound processes.Practical implicationsThe research offers interesting insights from a managerial perspective, as increasingly advanced and complex digital solutions require shorter times in supply chain management (SCM). Companies need to be able to quickly manage information and knowledge flows deriving from internal and external interactions and involvement with external actors upstream and downstream of the supply chain ecosystem. Therefore, the digital knowledge servitization of the supply chain also highlights implications for managers in terms of human resources management.Originality/valueThe novel research goal is to contribute to the supply chain literature by integrating the digital servitization with the knowledge view and analysing the impact on the inbound and outbound supply chain through the introduction of an open innovation business model.

Grounded in the dynamic capability theory, this study selects three typical manufacturing enterprises as the research subjects. Through longitudinal and cross-case analyses, it delves into the dynamic alignment between the digital servitization capabilities and strategies of manufacturing enterprises, as well as the mechanism through which this alignment influences firm performance. The findings indicate that—within the framework of capabilities, such as the strategy alignment model—among six potential alignment scenarios, only three configurations exert a significantly positive impact on firm performance: the alignment of service data integration capabilities/service demand exploration capabilities with product-centric digital servitization strategies and the alignment of digital service orchestration capabilities with ecosystem-centric strategies. The former bolsters efficiency advantages through value-added product servitization, while the latter unlocks ecological dividends by capitalizing on network effects. By uncovering the stage-specific patterns of capability–strategy alignment, this study enriches the dynamic capability theory with a micro-level explanation in the context of digital servitization. It also offers a staged transformation roadmap for manufacturing enterprises to mitigate the risk of misalignment between strategic choices and their existing capabilities.

PurposeThe authors seek to understand the process of digital servitization as a shift of manufacturing companies from the provision of standard products and services to smart solutions. Specifically, the authors focus on changes in the business model (i.e. the value proposition, the value delivery system and the value capture mechanism) for digital servitization.Design/methodology/approachThe authors examine a Chinese air conditioner manufacturer, Gree, who became the global leader with their smart solutions. These solutions included performance-based contracts underpinned by artificial intelligence (AI)-powered air conditioners that automatically adjust to environmental changes and are capable of remote monitoring and servicing thanks to its Internet of things (IoT) technology.FindingsTo successfully offer smart solution value propositions, a manufacturer needs an ecosystem value delivery system composed of suppliers, distributors, partners and customers. Once the ecosystem relationships are well aligned, the manufacturer gains value with multiple value capture mechanisms (i.e. efficiency, accountability, shared customer value and novelty). To arrive at this point, a manufacturer has to pass through different stages that are characterized by both discontinuous and continuous interplay between business models and digital technologies. At the beginning of each stage, new value propositions and value delivery systems are first discontinuously created and then enabled with digital technology. As a result, new value capture mechanisms are activated. Meanwhile, the elements of the existing business model are continuously improved.Research limitations/implicationsBy combining process-perspective and business-model lenses, the authors offer nuanced insights into how digital servitization unfolds.Practical implicationsExecutives can obtain insights into the business model elements, they need to change over the course of digital servitization and how to manage the process.Originality/valueA longitudinal case study of a traditional manufacturer that has achieved stellar success through digital servitization business models development.

PurposeDigital servitization concerns how manufacturers utilize digital technologies to enhance their provision of services. Although digital servitization requires that manufacturers possess new capabilities, in contrast to strategic (or dynamic) capabilities, little is known about how they develop the required operational capabilities. The paper investigates the mechanisms for developing operational capabilities in digital servitization.Design/methodology/approachThis paper presents an exploratory study based on 15 large manufacturers operating in Europe engaged in digital servitization.FindingsThree operational capability development mechanisms are set out that manufacturers use to facilitate digital servitization: learning (developing capabilities in-house), building (bringing the requisite capabilities into the manufacturer), and acquiring (utilizing the capabilities of other actors). These mechanisms emphasize exploitation and exploration efforts within manufacturers and in collaborations with upstream and downstream partners. The findings demonstrate the need to combine these mechanisms for digital servitization according to combinations that match each manufacturer’s traditional servitization phase: (1) initial phase - building and acquiring, (2) middle phase - learning, building and acquiring, and (3) advanced phase - learning and building.Originality/valueThis study reveals three operational capability development mechanisms, highlighting the parallel use of these mechanisms for digital servitization. It provides a holistic understanding of operational capability development mechanisms used by manufacturers by combining three theoretical perspectives (organizational learning, absorptive capacity, and network perspectives). The paper demonstrates that digital servitization requires the significant application of building and acquiring mechanisms to develop the requisite operational capabilities.

PurposeThe purpose of this paper is to provide a theoretical lens on digital servitization (DS) for future research purposes. By developing a multilevel framework that helps structure and untangle its complexity, the authors aim to increase understanding into the persistent challenge of DS.Design/methodology/approachBuilding on a problematization approach, critical incident technique was applied to a comparative, longitudinal, multiple-case study in which DS journeys from one Italian and one Belgian manufacturing firm were analyzed.FindingsAnalysis revealed that different levels and elements of the multilevel framework were simultaneously involved in the identified critical incidents. This huge interconnectedness severely challenged the DS journeys. Managerial (un)responsiveness played a central role in the organizational outcome for both firms.Originality/valueThe authors answer the call for a more holistic approach toward DS. A multilevel framework is provided to be employed by future researchers and practitioners alike. A mid-range theory for DS and propositions for future research are developed.

PurposeThis study shows various pathways manufacturers can take when embarking on digital servitization (DS) journeys. It builds on the DS and modularity literature to map the strategic trajectories of product–service–software (PSSw) configurations.Design/methodology/approachThe study is exploratory and based on the inductive theory building method. The empirical data were gathered through a workshop with focus groups of 15 servitization manufacturers (with 22 respondents), an on-site workshop (in-depth case study), semi-structured interviews, observations and document study of archival data.FindingsThe DS trajectories are idiosyncratic and dependent on design architectures of PSSw modules, balancing choices between standardization and innovation. The adoption of software systems depends on the maturity of the industry-specific digital ecosystem. Decomposition and integration of PSSw modules facilitate DS transition through business model modularity. Seven testable propositions are presented.Research limitations/implicationsWith the small sample size from different industries and one in-depth case study, generalizing the findings was not possible.Practical implicationsThe mapping exercise is powerful when top management from different functional departments can participate together to share their expertise and achieve consensus. It logs the “states” that the manufacturer undergoes over time.Originality/valueThe Digital Servitization Cube serves as a conceptual framework for manufacturers to systematically map and categorize their current and future PSSw strategies. It bridges the cross-disciplinary theoretical discussion in DS.

PurposeRecent research has recognised the importance of supply chains and ecosystems as key drivers of successful servitization strategies, especially in the context of inter-organisational relations (IOR). The body of knowledge has, however, become increasingly fragmented and diverse due to different disciplinary roots of both servitization and IOR research. The purpose of this paper is to take stock of current knowledge and to generate a set of future research directions for servitization-related supply chain and ecosystem research.Design/methodology/approachA systematic review methodology was applied. A thematic analysis was conducted on a sample of 34 papers in the period 2010–2021 to identify the key themes within the servitization-related supply chain and ecosystem literature.FindingsThe review revealed a limited, but expanding, knowledge base for servitization-related supply chain and ecosystem research. The findings provide insight into current trends across four thematic areas: theoretical orientation, methodological approaches, research context and research content. Within these themes, it was found that four main areas of research content have been studied (supplier relationships, risk perception and uncertainty, capability development and resource integration), with most research adopting case-based methodologies within three main industrial contexts: manufacturing, industrial and software. Finally, a broad range of theoretical orientations have led to an increasingly fragmented and diverse literature base.Originality/valueThis study is the first to review servitization-related supply chains and ecosystems. It contributes insights through an IOR lens to categorise and organise a core set of themes and concepts for servitization-related supply chain and ecosystems research. It identifies research gaps within the extant literature and presents a set of future research directions.

Many product manufacturers are transitioning into platform providers, a shift that requires a series of organizational changes. Nevertheless, limited attention has been given to the motivations behind this shift and the specific organizational changes undertaken by manufacturers seeking to become platform providers. To address this gap, this paper explores the connected cars landscape. Specifically, it examines the organizational transformation of automakers as they evolve from product-oriented to platform-oriented business models following the introduction of connected cars. This study draws on data from 12 automakers in the Brazilian automotive industry. The findings reveal three primary motivations driving automakers’ shift toward connected car business models and highlight six key organizational changes that support this transformation. These insights offer valuable theoretical and managerial guidance for servitization researchers and practitioners working with platform-oriented business models.