Strategic development of third-party logistics providers (TPLs): “Going under the floor” or “raising the roof”?

Contemporary (third-party logistics providers) TPLs are in danger of being stuck in the middle, unable to perform customer adaptation as well as before and unable to achieve sufficient economies of scale. This conceptual paper aims to explore challenges facing the strategic development of TPLs within a context of increased digitalization, e-commerce and servitization.There are two apparent strategic paths. Under circumstances of strong price pressure, there is demand for standardized TPL services offering simplicity, minimalism and functionality based on digitalization, e-commerce and servitization. Alternatively, with market developments responsive to supply chain complexity, digitalization, e-commerce and servitization enable development towards innovation and change.We conclude that these developments do not invalidate existing frameworks for TPL strategies but contribute alternative strategies. We formulate three propositions for each strategic path. To avoid being stuck in the middle, TPLs are encouraged to either develop efficient services through servitized logistics chains and digital solutions or develop advanced solutions to integrate the consumer into the logistics network system through competencies to control increased levels of complexity.     

Transforming provider-customer relationships in digital servitization: A relational view on digitalization

Digitalization is viewed as a source of future competitiveness due to its potential for unlocking new value-creation and revenue-generation opportunities. To profit from digitalization, providers and customers tend to move away from transactional product-centric model to relational service-oriented engagement. This relational transformation is brought about through digital servitization. However, current knowledge about how providers and customers transform their relationship to achieve benefits from digital servitization is lacking. This paper addresses that knowledge gap by applying the relational view theory to a study of four provider-customer relationships engaged in digital servitization. The results provide evidence for four relational components – complementary digitalization capabilities, relation-specific digital assets, digitally enabled knowledge-sharing routines, and partnership governance – that enable providers and customers to profit from digital servitization. A key contribution is the development of a relational transformation framework for digital servitization that provides an overview of how the four relational components evolve as the relationship progresses. In doing so, we contribute to the emerging servitization literature by offering key relational insights into the interdependence of activities throughout the transformation phases of provider-customer relationships in digital servitization.     

Perception of value delivered in digital servitization

This paper intends to explore the perception of value delivered in digital servitization in a business-to-business context of incumbent manufacturing firms. We investigate how individual entrepreneurial orientation (IEO) influence and affect the adoption of such digital servitization strategies. The observations are made through a survey and empirical assessment across a couple of large industrial organizations interested in servitization and digitalization. Findings contribute to the existing literature on digital servitization and business model innovation by suggesting that IEO influence perceived value in delivering digital service offers, whereas functional affiliation does not. Further observations suggest that digital capabilities can become a crucial enabler for the perception of value delivered in digital business models by providing swift access to data for affected stakeholders.     

Firm boundaries in servitization: Interplay and repositioning practices

The present study analyzes how servitization delineates a manufacturer's boundaries. Based on interviews with 57 senior managers and extensive secondary data collected from four global solution providers, this study contributes by revealing how servitization shapes firm boundary decisions and repositioning practices. First, the results demonstrate that servitization changes a manufacturer's a) identity from technology-focused to customer-centric, b) capabilities to integrate technology development with customer value understanding, c) power position in the manufacturing ecosystem from upstream to downstream, and d) efficiency logic toward a service factory logic. Second, this study describes the interplay among these boundary lenses in servitization. The developed framework can assist managers in their strategy implementation when moving toward servitization.     

Internet of things technologies,digital servitization and business model innovation in BtoB manufacturing firms

Technologies like the Internet of Things (IoT) are offering new opportunities and posing serious challenges to firms, forcing them to create entirely new business models, migrating from the conventional product-centric approaches to (digitally-based) service-oriented ones. This paper – following a qualitative research method – aims at describing the service-oriented impact of IoT technologies on firms' business models, with a particular focus on opportunities and challenges for BtoB manufacturing firms.Being the impact of IoT technologies on businesses a quite recent research stream, to date scarce attention has been devoted to the topic with specific attention to its impact on service-oriented business models in manufacturing firms. The paper contributes in this research stream in different ways. It proposes a map of digital servitization that helps in understanding firms' strategic transitions caused by technologies, making both theoretical and managerial contributions. Firstly, the research underlines the impact of the firms' sales model as a strategic factor in shaping firms' digital servitization strategies. In addition, three progressive levels of digital servitization complexity are identified, namely product- process- and outcome-oriented, that are based on an increasing use of IOT technologies and have specific challenges and opportunities.     

Boosting servitization through digitization: Pathways and dynamic resource configurations for manufacturers

The importance of digital technologies for services in manufacturing has often been posited, but current literature has neglected to explain how companies can leverage digital methods to increase their service offering. In this article we contribute to current theory by examining how digitization can enable servitization for manufacturers. By performing a multiple-case study at four manufacturing SMEs, we provide evidence for a priming and a capability effect. In terms of priming, we find that specific digitization options lead to three servitization pathways: industrial, commercial and value servitization. Through a dynamic resource-based lens, the barriers, dynamic resource configurations and competitive benefits specific to each pathway are discussed. Finally, this paper offers managers insight on successfully reaching higher service levels through development of digital assets, and on the skills necessary to further integrate into customers' processes.     

Unravelling the internal and external drivers of digital servitization: A dynamic capabilities and contingency perspective on firm strategy

Despite the increased interest in using digital technologies for servitization purposes, little is known about what drives firms towards a digital servitization strategy. Using a dynamic capabilities lens, we look into the relationships between two organizational mechanisms – exploitation and exploration – and firms' orientation towards digitization, servitization and digital servitization. On top, we examine the influence of two environmental contingencies – technological turbulence and competitive intensity – as potential influencers of these relationships. We collected and analyzed data of 139 Belgian firms through hierarchical regressions. Exploitation and exploration are positively associated with digital servitization, but exploration trumps the effect of exploitation when firms do both. Technological turbulence is positively associated with digitization regardless of the firm's level of exploration or exploitation, and competitive intensity only relates positively with servitization when firms emphasize exploration. Theoretically, we contribute to the literature by unravelling the relationship between firms' dynamic capabilities and their environment. In order to fully understand firms' strategic transition towards digital servitization, both should be considered. As managerial implications, we suggest that firms pay close attention to adapting their strategy to fit an increasingly changing environment.     

Digital servitization: Crossing the perspectives of digitization and servitization

For over three decades now, several product companies around the world have been undertaking servitization paths. They have been devoting growing and substantial efforts to expand their service business. Expanding the service business in addition to their traditional core product business secures long-term growth and strengthens competitive advantages in business-to-business marketplaces. Recently, service business expansion has taken up many of the new digital technologies offered through the digital transformation. Thus, the servitization literature has progressed toward a dialogue on digital servitization . Against this background, the present article introduces the reader to this special issue. It first recalls key aspects of the emerging digital servitization discussion, and then depicts, through illustrative case studies, the growth paths utilized by industrial product companies when they take advantage of the digital servitization process. After discussing how the articles included in this special issue advance the literature, the article develops a number of directions for future research on digital servitization.     

Servitization,digitization and supply chain interdependency

This study draws on literature at the intersection of servitization, digital business models and supply chain management. Work empirically explores how digital disruption has affected Business-to-Business (B2B) interdependencies. Dematerialization of physical products is transforming the way firms are positioned in the supply chain due to a reduction in production and transport costs and the different ways business engage with customers. Specifically, we propose that these new market conditions can empower downstream firms. We further propose that upstream firms can still capture additional value through digital service if their servitized offer includes difficult to imitate elements. The context of the analysis is the publishing industry. The Payment Card method employed is used to test UK and US consumer's perceptions of digital formats (eBooks) and assess their willingness to pay in relation to printed formats. The method undertaken enables us to elicit aggregated consumer demand for eBooks which in turn identifies optimal pricing strategies for the digital services. Analysis demonstrates that during digital servitization upstream firms should seek to deploy unique resources to ensure their strategic position in the supply chain is not diminished.     

Paths Toward Radical Service Innovation in Manufacturing Companies—A Service‐Dominant Logic Perspective

Research on servitization of manufacturing companies concentrates on typologies of product–service bundles, on transition pathways to increased servitization, and on resource and capabilities configurations necessary to accomplish this transition. Missing from existing research is an analysis of the degree of novelty of service innovations introduced by manufacturing companies. Therefore, this article shifts the focus from the transition process itself to the question of how manufacturing companies can introduce radical service innovations to the market. This article links servitization literature with service innovation literature and investigates how manufacturing companies can introduce radically new services in terms of three forms of innovations: service concept innovations, customer experience innovations, and service process innovations. Service‐dominant logic (SDL) is applied as the theoretical lens because it covers four significant factors influencing the success of companies’ innovation activities: actor value networks, resource liquefaction, resource density, and resource integration. Based on a multiple case study of 24 Danish business‐to‐business manufacturing small‐ and medium‐sized enterprises and through a fuzzy set qualitative comparative analysis, different configurations of the principles of SDL are analyzed. They describe the paths to radical service innovation. Digitalization appears as a central causal condition in the bulk of the configurations. Big and rich data generated internally within the focal company in combination with for instance customer data can enhance the innovativeness of the service offerings. However, digitalization is not a sufficient condition for launching radical service innovation—it should be combined with an efficient mobilization of resources internally within the focal company and/or collaboration with other organizations within the value system. In addition, the analysis hints to a need to detach from immediate customers as the prime driver of service innovation.     

Behind the scenes of digital servitization: Actualising IoT-enabled affordances

Manufacturers are increasingly transforming through servitization, and the Internet of Things (IoT) is a crucial enabler of this transformation. Current literature describes the diverse outcomes from IoT that enable servitization but fails to explain the reasons behind the diversity and the processes manufacturers go through to create these outcomes. This study aims to identify these processes by drawing on affordance theory and its core principles of affordance perception (understanding an opportunity provided by technology) and affordance actualisation (taking advantage of an opportunity provided by technology). By using affordance theory to analyse the case scenarios of six manufacturing firms, the study develops a framework to explain the realisation of the opportunities the IoT provides to manufacturers' servitization efforts. The analysis identifies three types of affordances and actualisation processes that help manufacturers realise the opportunities of the IoT. This framework enables manufacturers to systematically manage the contributions from the IoT and the associated actualisation efforts required to advance servitization. The study adds to the understanding of the IoT's role in a manufacturing servitization context.     

Challenges of servitization: A systematic literature review

The challenges of servitization have gained significant attention from both academics and practitioners, as more firms in the industrial sector are seeking marketing opportunities leading to business growth through the adoption of a service strategy. Although existing research has explored its challenges from multiple perspectives, this is largely fragmented and the studies offer little understanding of the impacts of the challenges on the realisation of servitization benefits and improvements in business performance. This study, therefore, aims to create a formal construct of the challenges and develop a set of hypotheses through a systematic review of the servitization literature to build a theoretical model explaining the underlying relationships. Five challenges are identified: organisational structure, business model, development process, customer management, and risk management. The indicators of each challenge are discussed to support the establishment of hypotheses. This study contributes to the current body of knowledge by reaching a clear conclusion from the fragmented literature and brings together five challenges to explore their impacts on the overall business.     

Critical meta-analysis of servitization research: Constructing a model-narrative to reveal paradigmatic assumptions

The literature on servitization in the manufacturing context has grown rapidly. This study is the first systematic analysis of the paradigmatic assumptions of servitization research. Considering scientific research as a rhetorical activity, this study introduces the methododological approach to industrial marketing management research. This systematic review identifies both stylistic and structural aspects characterizing servitization research. The current review is based on a representative sample of 55 articles covering marketing, management, operations, innovation, and entrepreneurship research. The review discovered four paradigmatic assumptions that guide servitization research: 1) alignment to the Western narrative of constant development; 2) realist ontology; 3) positivist epistemology; and 4) managerialism. Following these findings, the study develops alternative directions for servitization research to challenge these paradigmatic dominances. The refined method of the model-narrative has the potential to generate insightful future research in the field of industrial marketing management. As an effective approach to analyzing research streams systematically, it facilitates critical meta-level reflection on servitization and could be widely applied beyond that topic.     

Digitalization within food supply chains to prevent food waste. Drivers,barriers and collaboration practices

Food supply chains increasingly rely on big-data management solutions to foster collaboration across the food supply chain and improve business performance. However, little is known about collaboration practices that actors on the digital food supply chain adopt to solve problems such as food waste, or about the drivers and barriers related to the digital transformation of the food supply chain. Most of food waste studies rely on quantitative analysis, which cannot reveal relevant details about the tensions and dynamics of collaboration. We conducted a qualitative study drawing on eighteen in-depth interviews - of managers of large multinational and local organizations covering different and relevant roles on the digital food supply chain - to investigate how organizational and food supply chain processes are affected by the digitalization of the operations along the food supply chain. By triangulating emerging findings with literature on supply chain management we discuss different views about collaborative practices for food waste prevention in the food supply chain and provide insights on how supply chain design and firms' operations have been re-conceptualized with the usage of digital technologies and on the institutional forces both limiting (barriers) and fostering (drivers) the diffusion of the digital food supply chain.     

How to perform collaborative servitization innovation projects: the role of servitization maturity

Although current literature indicates that openness and collaboration are crucial for success in an innovative servitization solution within interorganisational servitization projects, research is limited compared to that on product and technology innovation projects. Moreover, this emerging servitization literature is limited to the traditional lead-firm perspective within larger consortiums. To help redress the balance, our research studied six collaborative servitization projects in mobile information and communication technologies (mICT) to explore why some open innovation efforts succeed in simultaneous service and product innovation with a market application of innovative solution, while others do not. The study provides empirical evidence that only a small number of projects resulted in an effective servitization innovation solution. This conclusion emphasises the complexity of creating service innovation in the mICT sector. By comparing better performing servitization projects with those that were less successful suggests that higher performance, in terms of novel service development, requires more than mere strong intention, adequate leadership and change management competencies. Rather, it also requires real servitization maturity in terms of a shared servitization framework and market-oriented innovation.     

Causal or effectual? Dynamics of decision making logics in servitization

This study explores servitization as an innovative market strategy for manufacturers and investigates how the decision making logics change over time in the servitization transformation process. Effectuation theory is applied to examine servitization as a new theoretical exploration. A longitudinal case study of a global heavy vehicle manufacturer's servitization process in China reveals that the decision makers adjust their decision making logics depending on the stage of the servitization process and associated risk patterns. As the servitization process evolves into a more sophisticated stage, decision makers will change their decision making logics from a causation dominant logic to an effectuation dominant logic in order to cope with the increased risks. Effectuation theory originally developed from entrepreneurship research is found to be a valid theory for the explanation of the risk and uncertainty control behaviors in the servitization transformation process of manufacturing firms.     

Performance feedback and middle managers’ divergent strategic behavior: The roles of social comparisons and organizational identification

Research Summary: What drives middle managers to search for new strategic initiatives and champion them to top management? This behavior—labeled divergent strategic behavior—spawns emergent strategies and thereby provides one of the essential ingredients of strategic renewal. We conceptualize divergent strategic behavior as a response to performance feedback. Data from 123 senior middle managers overseeing 21 multi‐country organizations (MCOs) of a Fortune 500 firm point to social performance comparisons rather than historical comparisons in driving divergent strategic behavior. Moreover, managers’ organizational identification affects whether they attend to organizational‐ or individual‐level feedback. These results contribute to research on performance aspirations and strategy process by providing a multilevel, multidimensional framework of performance aspirations in middle management driven strategic renewal. Managerial Summary: Middle managers are essential actors in strategic renewal. Their unique positions offer insights into operations alongside knowledge of strategy. In contrast to typical assessments of managerial performance with reference to a prior year, this research shows that performance comparisons relative to peers and other organizational units better motivate managers’ divergent strategic behavior. Our results also show that managers who identify with the firm are more attentive to organizational rather than individual performance discrepancies. Thus, our study unveils an important approach for organizations aiming to spark strategic renewal.     

Club convergence and drivers of digitalization across Indian states

Disparity in the level of digitalization is a crucial driver of economic inequality in an economy. Although a pocket of its population is still bereft of the benefits of digitalization, India currently has the second highest number of internet subscribers in the world despite the nation's late adoption of digital technology. An accurate assessment of the current state of digitalization in the country is required for devising effective initiatives towards building a Digital India and bridging the nation's internal digital divide. Considering 17 major Indian states and 21 variables for 10 years, we constructed a composite index of digitalization with the help of Principal Component Method (PCM). This paper identifies factors responsible for the digitalization divide across states. In the second part of the analysis, the study confirms, with the help of club convergence test, the absence of overall convergence towards digitalization and the existence of the non-convergent group. This paper also shows that the non-convergent group of states are at the bottom of the ranking table which indicates the need for greater attention to initiatives to bridge the digital divide.     

Erratic strategic decisions: when and why managers are inconsistent in strategic decision making

While decision makers in organizations frequently make good decisions rooted in stable and consistent preferences, such consistency in outcomes is not always the case. In this study, we adopt a psychological perspective of judgment to investigate managers' erratic strategic decisions, which we define as a manager's inconsistent judgments that can shape the direction of the firm. In a study of 2,048 decisions made by 64 CEOs of technology firms, we examine how both metacognitive experience and perceptions of the external environment (hostility and dynamism) could affect the extent to which managers make erratic strategic decisions. The results indicate that managers with greater metacognitive experience make less erratic strategic decisions. The results also indicate that in hostile environments managers make more erratic strategic decisions. But contrary to our expectations, in dynamic environments managers make less erratic strategic decisions. Similarly, hostility and dynamism interact in their effect on erratic strategic decisions in that the positive relationship between environmental hostility and erratic strategic decisions will be less positive for managers experiencing high environmental dynamism than those experiencing low environmental dynamism. These results have important implications for strategic decision‐making research. Copyright © 2010 John Wiley & Sons, Ltd.     

Digitalization and economic growth: A comparative analysis of Sub-Saharan Africa and OECD economies

This paper examines the contribution of digitalization to economic growth of Sub Saharan Africa (SSA) in comparison with the Organization for Economic Cooperation and Development (OECD) economies. The main reason for comparing the most and the least developed countries to measure the effects of digitalization is to have an insight of whether such effects depend on the levels of development of the country. New technologies in Sub Saharan Africa are assumed to have played significant roles in economic activity, including accessibility of communications, which was impeded by poor infrastructure, accommodation of the poor majority who were initially financially excluded from mobile banking and participation of small and medium enterprises (SMEs) in e-commerce. On the other hand, due to the effects of digitalization, least developed countries in SSA have been facing a premature deindustrialization.This study employs a panel dataset consisting of 11 years from 2006 to 2016 for 41 SSA and 33 OECD economies and we use the generalized linear methods of moments (GMM) estimators. The results show that digitalization has a positive contribution to economic growth in both groups of countries. The effect of broadband internet is minimal for SSA compared to OECD countries, whereas the impact of mobile telecommunications is higher in SSA compared to the OECD counterpart. These results are particularly interesting as less advanced technologies create more opportunities in the least developed countries since there is more space for improvement. With respect to policy implications, this study recommends that SSA governments should invest more in ICT along with other infrastructures, so as to benefit from digitalization and to realize significant economic growth.