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Transformation Process

In: Business and Management

Submitted By mighty13
Words 12026
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Journal of Operations Management 31 (2013) 169–180

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Servitization: Disentangling the impact of service business model innovation on manufacturing firm performance
Ivanka Visnjic Kastalli a,b,∗ , Bart Van Looy c,d a Operations and Innovation Management Department, ESADE Business School, Spain
Cambridge Service Alliance, University of Cambridge, United Kingdom
Faculty of Business and Economics, KU Leuven, Belgium d School of Management and Governance, University of Twente, Netherlands b c

a r t i c l e

i n f o

Article history:
Received 27 June 2011
Received in revised form
20 December 2012
Accepted 16 February 2013
Available online 7 March 2013
Open service innovation
Business model

a b s t r a c t
As manufacturing businesses operate in an ever more competitive, global economy where products are easily commoditized, innovating by adding services to the core product offering has become a popular strategy. Contrary to the economic benefits expected, recent findings pinpoint implementation hurdles that lead to a potential performance decline, the so-called ‘servitization paradox’. In this paper, we analyze this paradox by disentangling the value creation and value appropriation processes of 44 national subsidiaries of a global manufacturing firm turned product-service provider, in the 2001–2007 period.
Our findings show that the firm under study is able to successfully transcend the inherent substitution of products by services and to enact complementary sales dynamics between the two activities. Moreover, labor-intensive services such as maintenance, which imply higher levels of customer proximity, further enhance product sales. Empirical results also reveal a positive yet non-linear relationship between…...

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