Purpose – The present study proposes a product-service systems (PSS) risk management decision-making framework for PSS operation, which can enable global manufacturing companies to offer PSS successfully. Thus, we aim to contribute primarily to developing the PSS literature by integrating insights from the literatures on risk management and decision making. Design/methodology/approach – This study is based on an exploratory, single case study with a Swedish manufacturing company that has long-term experience with providing PSS. In total, we conducted 25 semi-structured interviews with diverse respondents from different functional units. Findings – The study’s main findings include identifying and proposing an interconnection between the operational risks associated with providing PSS, possible risk management responses, and decision criteria, all of which enable decision makers to select an appropriate risk management response. Research limitations/implications – Our study contributes to the literature in three ways. First, we classify PSS operational risks into three categories related to delivery competence risks, technical risks, and behavioural risks. Second, we explain conditions under which each risk can be mitigated using different risk management strategies (avoidance, reduction, sharing/transfer, and retention). Finally, we combine different risk categorizations, decision criteria, and risk responses into an integrated decision framework of PSS risk management.Originality/value – Our novel contribution is developing a PSS risk management decision support framework, which holds theoretical and practical value.

Studies on Product–Service Systems (PSS) are emerging as a growing body of literature driven by the desire to combine economic prosperity and sustainable resource management. However, knowledge about how companies can adopt and implement PSS has remained limited. In this study, a systematic literature review is conducted related to understanding implementation of PSS business models and five sets of tactical practices. Based on an in-depth analysis of 67 articles, it was found that PSS is increasing rapidly as a research field, which is spread across a variety of disciplines and research domains. More specifically, research findings were accumulated from the field to present a framework supporting the implementation of well-established categories of PSS business models, that is, product-oriented, use-oriented, and result-oriented business models. Each business model category is linked to five operational-level tactics that ensure the model can be implemented successfully and subsequently generates value. These tactical sets include 1) contracts, 2) marketing, 3) networks, 4) product and service design, and 5) sustainability operational practices. This study concludes by proposing suggestions for future research.

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.