Servitization as reinforcement, not transformation

Abstract

Purpose The purpose of this paper is to explain why product-centric manufacturers utilize advanced services not as vehicles of transformation, but of reinforcement, to strengthen their established business model logic based on selling products and basic product-related services. Design/methodology/approach The empirical basis of this study relies on an in-depth case study of a globally operating manufacturer of industrial pumps and related services. The data includes 31 interviews conducted over several years of in-depth collaboration with the studied firm. Findings Product-centric manufacturers utilize advanced services as engagement platforms to facilitate the external and internal engagement of the actors and the resources controlled by them. Externally, advanced services facilitate access to customer decision makers and insights into their latent needs. Internally, advanced services help the manufacturer to more effectively leverage resources that reside within its different organizational units. Ultimately, in leveraging advanced services as engagement platforms, the manufacturer seeks to boost activities with the greatest immediate impact on its market performance: the sale of products and basic product-related services. Practical implications The study explains why managers should invest into development of advanced services even if such services contribute only marginally to the manufacturer’s direct revenues and profits. Originality/value This study contributes to development of an alternative explanation of servitization that departs from the current paradigmatic assumptions in the field.

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