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It has been argued that servicizing business models, under which a firm sells the use of a product rather than the product itself, are environmentally beneficial. The main arguments are as follow. First, under servicizing the firm charges customers based on the product usage. Second, the quantity of products required to meet customer needs may be smaller because the firm may be able to pool customer needs. Third, the firm may have an incentive to offer products with higher efficiency. Motivated by these arguments, we investigate the economic and environmental potential of servicizing business models. We endogenize the firm’s choice between a pure sales model, a pure servicizing model, and a hybrid model with both sales and servicizing options; the pricing decisions; and the resulting customer usage. We consider two extremes of pooling efficacy, i.e., no pooling versus strong pooling. We find that under no pooling servicizing leads to higher environmental impact due to production but lower environmental impact due to use. In contrast, under strong pooling, when a hybrid business model is more profitable, it is also environmentally superior. However, a pure servicizing model is environmentally inferior for high production costs because it leads to a larger production quantity even under strong pooling. We also examine the product efficiency choice and find that the firm offers higher efficiency products only under servicizing models with strong pooling. This paper was accepted by Serguei Netessine, operations management .

Based on the proposition that leasing is environmentally superior to selling, some firms have adopted a leasing strategy and others promote their existing leasing programs as environmentally superior to \"green\" their image. The argument is that because a leasing firm retains ownership of the off-lease units, it has an incentive to remarket them or invest in designing a more durable product, resulting in a lower volume of new production and disposal. However, leasing might be environmentally inferior because of the direct control the firm has over the off-lease products, which may prompt the firm to remove them from the market to avoid cannibalizing the demand for new products. Motivated by these issues, we adopt a life-cycle environmental impact perspective and analytically investigate if leasing can be both more profitable and have a lower total environmental impact. We find that leasing can be environmentally worse despite remarketing all off-lease products and greener than selling despite the mid-life removal of off-lease products. Our analysis also provides insights for environmental groups and entities that use different approaches to improve the environmental performance of business practices. We show that imposing disposal fees or encouraging remanufacturing, under some conditions, can actually lead to higher environmental impact. We also identify when educating consumers to be more environmentally conscious can improve the relative environmental performance of leasing. This paper was accepted by J. Miguel Villas-Boas, marketing.

Access-based consumption of clothing has garnered attention because of its sustainability potential; however, the profile of a product-service combination that benefits both consumers and the environment has been inconclusive. To characterize these services, this study explored consumer preferences and climate change impact of diverse garment type and service combinations for a clothing rental service. We performed a web-based survey in Japan to analyze consumer preferences and intended behavior for 15 garment types and ten service types in clothing rentals. The survey results were used to characterize the desired clothing rental service using a cluster analysis and to calculate life cycle greenhouse gas emissions when the garment was purchased and rented. The results showed a specific combination of consumer segments, product characteristics, and service types that construct a sustainable clothing rental service; formal dress, dress shirt, and maternity wear were the garment types that would reduce greenhouse gas emissions by 21% ~ 75% depending on consumer behavior and service implementation. We also demonstrate that implementing services often augments greenhouse gas emissions. This study conveys that renting garments for occasional wear are ideal for both consumers and the environment, and rental service providers need to effectively manage product’s lifetime extension.

The benefits of the servicizing business model, in which a firm sells the use or functionality of a product rather than the product itself, extend beyond attracting new customers and driving economic growth. Aligned with circular economy principles, servicizing promotes sustainability by encouraging firms to enhance product durability and customers to be more mindful of their amount of usage. However, the lack of product ownership may lead to product misuse, negatively affecting both economic and environmental outcomes. This study addresses product misuse as a major risk to servicizing firms’ performance and investigates whether, and under what conditions, adopting Behavior-Dependent Pricing (BDP) can mitigate this risk. Leveraging digital technologies such as the Internet of Things (IoT), we develop a BDP model in which a firm monitors customers’ usage behavior and provides monetary incentives for more sustainable use. We identify conditions under which BDP leads to a win–win–win outcome by increasing firm profits, enhancing customer utility, and reducing environmental impacts. This study provides firms with insights on how and when servicizing can be less vulnerable to product misuse risk that could undermine profitability, thereby encouraging adoption of the servicizing business model and generating economic and environmental benefits.

Based on the enterprise knowledge-based view, this study follows the basic logic of “knowledge acquisition-knowledge transformation-knowledge creation” to explore the effects of cross-border search and knowledge co-creation on the service innovation performance of manufacturing enterprises. Furthermore, compositional capability is introduced to investigate the moderator in the connection of knowledge co-recreation and service innovation performance. We collected 378 samples from the organizations that are taking servicizing transformation in China’s manufacturing industry. Then we applied structural equation modeling (SEM) to test our research model. The results reveal that both cross-border technological knowledge search and cross-border market knowledge search can significantly improve embedded knowledge co-creation and alliance-based knowledge creation of manufacturing enterprises, and then, directly and indirectly, boost service innovation performance. Compositional capability positively moderates the relationship between embedded knowledge co-creation and service innovation performance. This study provides theoretical and practical guidance for knowledge-based service innovation in China’s manufacturing industry.

Managed print service (MPS) is a type of information technology infrastructure service that provides centralized management of companies’ printing device fleets. In this paper, we estimate the provider’s risk preference in MPS using a proprietary data set from Xerox Corporation. We adopt a structural approach in our empirical analysis by modeling the contracting and usage processes of MPS as a two-stage screening game and building econometric models based on the equilibrium contracts and print volumes. Our econometric models have a unique hierarchical structure that allows clustering of printers with the same contracts in the same company, thereby capturing the B2B nature of MPS. We find that Xerox exhibits risk aversion in MPS contracting and provide institutional details of Xerox’s commission holdback policy that may cause the observed risk aversion. In the counterfactual analysis, we demonstrate the significance of the provider’s risk aversion and the implications of the commission holdback policy on equilibrium contracts, the expected earnings of Xerox and customer companies, and their preferences for printer models. The E-companion is available at https://doi.org/10.1287/opre.2017.1673 .

In response to the global trend of low carbon and the concept of sustainable development, enterprises need to develop R&D for the manufacturing of energy-saving and sustainable products and low carbon products. Therefore, the purpose of this study was to construct a decision model for sustainable product design and development from product servicizing in Taiwan. The study used the grounded theory to extract the results of the expert interviews to analyze factors of sustainable product design and development under principles of product servicizing. Then, this study established a sustainable development checklist of product servicizing based on life cycle as the criterion of evaluation for sustainable product design and development. Finally, the study constructed a decision model for sustainable development of product design and servicizing.

隨著製造與服務界線模糊趨勢，製造服務化崛起，涉及公司層級策略的調整、組織內部和組織間制度關係的調整、相關能力的建立、新的定價和利潤模式。本研究探討製造服務化的定義和本質，並提出三大發展模式（產品延伸服務、產品功能性服務、整合性解決方案）。在三大模式下，本研究引入分析構面，透過案例比較分析，以探討國內外廠商在製造服務化的內涵差異：1.供應鏈層面：「供應鏈關係的再結構」相對於「新供應鏈關係的價值創造」；2.提供內容層面：「產品／服務之功能性提供」相對於「產品／服務之創新性提供」；3.複雜性層面：「技術／系統複雜性低」相對於「技術／系統複雜性高」，提出對台灣製造業往服務化發展的可能路徑與對我國政策意涵。

Servicizing can be a driving force for extended product responsibility. Employing a servicizing paradigm, companies can sell the function of the product rather than the product itself, and maintain ownership of the product throughout its useful life. This chapter looks at some examples of products that can be utilized through servicizing: selling illumination, instead of light bulbs; selling a painted car, instead of paint; selling floor comfort and esthetics, instead of commercial carpets; and the customer hiring a chemical supplier to operate former's water treatment system, thus enabling fewer chemicals being used for the treatment system. The sharing economy can be applied to the service sector. This can best be done by looking at “underutilized assets.” Collaborative consumption involves using the Internet to expand the market and make it easier for people who need something to find someone who has it.

Servicizing can be a driving force for extended product responsibility (EPR). Here, the process participants along the product chain or life cycle share responsibility for the life cycle environmental impacts of the whole product system, including upstream, production, and downstream impacts. A traditional manufacturing model is based on utilizing the natural resources and energy to manufacture a product that provides some useful function to the consumer. Employing servicizing paradigm, companies can sell the function of the product rather than the product itself, and maintain ownership of the product throughout its useful life. This would result in fewer products manufactured, less resources employed, and less waste created. Examples for such a business model can include selling illumination instead of light bulbs, and selling painted car by a paint maker to a car manufacturer instead of just selling paints.