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On the road to digital servitization – The (dis)continuous interplay between business model and digital technology
School of Business Administration, South China University of Technology, Guangzhou, China.
ESADE Business School, Ramon Llull University, Barcelona, Spain.
Luleå University of Technology, Department of Business Administration, Technology and Social Sciences, Business Administration and Industrial Engineering. School of Management, University of Vaasa, Vaasa, Finland.ORCID iD: 0000-0003-3255-414X
School of Business Administration, South China University of Technology, Guangzhou, China.
2021 (English)In: International Journal of Operations & Production Management, ISSN 0144-3577, E-ISSN 1758-6593, Vol. 41, no 5, p. 694-722Article in journal (Refereed) Published
Abstract [en]

Purpose – The 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/approach – The 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.

Findings – To 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/implications – By combining process-perspective and business-model lenses, the authors offer nuanced insights into how digital servitization unfolds.

Practical implications – Executives 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/value – A longitudinal case study of a traditional manufacturer that has achieved stellar success through digital servitization business models development.

Place, publisher, year, edition, pages
Emerald Group Publishing Limited, 2021. Vol. 41, no 5, p. 694-722
Keywords [en]
Digital servitization, Business model innovation, Digital business model, Value creation, Value driver, Servitization, Digitalization
National Category
Business Administration
Research subject
Entrepreneurship and Innovation
Identifiers
URN: urn:nbn:se:ltu:diva-85744DOI: 10.1108/IJOPM-08-2020-0544ISI: 000658380000001Scopus ID: 2-s2.0-85107326531OAI: oai:DiVA.org:ltu-85744DiVA, id: diva2:1569758
Funder
Vinnova
Note

Validerad;2021;Nivå 2;2021-08-18 (alebob);

Finansiär: Major Project of National Social Science Fund of China (18ZDA062); Spanish Ministry of Science, Innovation and Universities (PGC2018-2010;101022-A-100); PiiA ProcessIndustrial IT and Automation

Available from: 2021-06-21 Created: 2021-06-21 Last updated: 2021-08-18Bibliographically approved

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Parida, Vinit

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