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Mitigating adverse customer behaviour for product-service system provision:: An agency theory perspective
Luleå University of Technology, Department of Business Administration, Technology and Social Sciences, Business Administration and Industrial Engineering.ORCID iD: 0000-0002-8939-5509
Luleå University of Technology, Department of Business Administration, Technology and Social Sciences, Business Administration and Industrial Engineering.ORCID iD: 0000-0001-5464-2007
Luleå University of Technology, Department of Business Administration, Technology and Social Sciences, Business Administration and Industrial Engineering.ORCID iD: 0000-0003-3255-414X
2018 (English)In: Industrial Marketing Management, ISSN 0019-8501, E-ISSN 1873-2062Article in journal (Refereed) Epub ahead of print
Abstract [en]

Offering product-service systems (PSS) arguably results in economic, environmental and social benefits but also entails significant challenges related to relational dynamics between the provider and the customer. Although prior studies suggest that adverse customer behaviour during PSS provision is likely, they provide a limited theoretical understanding of the conceptualization of such relational problems and, more importantly, offer few possible ways to address these problems. By applying the lens of agency theory, this study examines PSS provider-customer relational problems and solutions. Therefore, the purpose of this study is to identify agency problems and propose mechanisms to mitigate adverse customer behaviour in PSS provision. Based on a multiple case study approach involving two manufacturing companies, several results are presented. First, we identify and describe two underlying reasons for adverse customer behaviour. These reasons are associated with goal differentiation and monitoring challenges. Second, different agency mechanisms (i.e. sharing, monitoring and trust) are presented as approaches to mitigate the likelihood of adverse customer behaviour. The matching of agency problems with agency mechanisms to mitigate these problems lays the groundwork for developing a framework for agency situation evaluation during the formation and ongoing phases of the PSS agreement. In addition, the choice of agency mechanism is found to be correlated with the maturity and type of customer relationship and can change over time as new customers become known and then become loyal. The proposed framework has major theoretical implications for the PSS literature as well as managerial implications for large manufacturing companies engaged in PSS provision.

Place, publisher, year, edition, pages
2018.
National Category
Social Sciences Other Engineering and Technologies not elsewhere specified
Research subject
Entrepreneurship and Innovation
Identifiers
URN: urn:nbn:se:ltu:diva-68346DOI: 10.1016/j.indmarman.2018.04.004OAI: oai:DiVA.org:ltu-68346DiVA, id: diva2:1197735
Available from: 2018-04-13 Created: 2018-04-13 Last updated: 2018-08-22
In thesis
1. Towards a framework for product-service system business model implementation
Open this publication in new window or tab >>Towards a framework for product-service system business model implementation
2018 (English)Doctoral thesis, comprehensive summary (Other academic)
Alternative title[sv]
Implementering av affärsmodeller: Ett ramverk för produkt-tjänstesystem
Abstract [en]

Manufacturing companies are increasingly focused on service-led growth to gain new revenue streams and achieve sustainable competitive advantages. In this regard, offering product-service systems (PSS) is proposed as an attractive solution for manufacturing companies to achieve economic, environmental, and social benefits. More specifically, through the integration of provider and customer operations, efficiency is increased because each party focuses on its core competencies, and operations are optimized. For example, prolonged product lifetimes and increased resource utilization are part of the sustainability achievements that can be achieved through successful PSS implementation.

Still, successful implementation of PSS is rare. The business model has become acommon unit of analysis in PSS and the crucial factor that may differentiate successful and unsuccessful PSS companies. Revising business models toward PSS provision and the implementation of the PSS business model is a challenging process that constitutes a major reason why companies struggle to increase the service degree of their offerings. This thesis suggests that a better understanding of tactics, risk management, service network adjustment, and activity alignment is associated with PSS business model implementation. Therefore, the purpose of this thesis is to advance the understanding of PSS business model implementation.

Comprised of a cover story and five separate but interrelated articles, this dissertation explores the implementation of product-service systems business models. The results are based on a systematic literature review and four case studies with Swedish manufacturing companies. The thesis is empirical based on 107 interviews with employees from four different manufacturing companies and eight distributers of one of the case companies.

This thesis contributes to the PSS literature by proposing a four-phase PSS business model implementation framework. The framework goes beyond selecting a PSS business model to also include the configuration of related tactical sets, risk identification and management, and adjustment of the delivery practices, along with activity alignment. All phases are crucial for PSS business model implementation and therefore make specific contributions by themselves. Furthermore, by applying agency theory to mitigate adverse customer behavior, this thesis contributes to the increased legitimacy of the PSS research field.

Place, publisher, year, edition, pages
Luleå: Luleå tekniska universitet, 2018
Series
Doctoral thesis / Luleå University of Technology 1 jan 1997 → …, ISSN 1402-1544
National Category
Business Administration Other Engineering and Technologies not elsewhere specified
Research subject
Entrepreneurship and Innovation
Identifiers
urn:nbn:se:ltu:diva-68716 (URN)978-91-7790-148-8 (ISBN)978-91-7790-149-5 (ISBN)
Public defence
2018-09-05, A109, Luleå, 09:30 (English)
Opponent
Supervisors
Available from: 2018-05-14 Created: 2018-05-14 Last updated: 2018-08-21Bibliographically approved

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