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Service Business Development in Small- to Medium-Sized Equipment Manufacturers
Authors:Marco Paiola  Heiko Gebauer  Bo Edvardsson
Affiliation:1. Department of Economics and Management , University of Padua , Padova , Italy marco.paiola@unipd.it;3. Department of Innovation Research in Utility Sectors (Cirus) , Eawag: Swiss Federal Institute of Aquatic Science &4. Technology , Dübendorf , Switzerland;5. Service Research Center , Karlstad University , Karlstad , Sweden;6. CTF—Service Research Center , Karlstad University , Karlstad , Sweden
Abstract:Purpose: This article explores service business development by small- and medium-sized equipment manufacturers (SMEMs). It focuses on underlying dynamic and operational capabilities in service business development.

Design/Methodology/Approach: The research design is based on case study research with nine companies from Germany, Italy, Sweden, and Switzerland.

Findings: The findings are twofold. First, the authors elaborate the phases and capabilities necessary for service business development. Second, they argue that these phases and capabilities depend on sales channels (direct sales versus indirect sales through distributors) and customer structures (a limited number of strategic customers versus many end-customers). SMEMs selling directly to a limited number of strategic customers develop organizational capabilities through four phases: (1) consolidation of service offerings, (2) job enlargements in organizational functions, (3) job enlargement in the key account teams, and (4) orchestration of partners to widen the solutions offered to customers. SMEMs selling indirectly through distributors to many customers develop organizational capabilities through the following four phases: (1) rearranging collaboration with distributors, (2) enlarging the service competencies of distributors, (3) modifying distributors into subsidiaries, and (4) enlarging jobs in the sales function of the subsidiaries.

Research Limitations/Implications: The research limitations are due mainly to the intrinsic nature of qualitative research.

Practical Implications: Managers can obtain guidance for service business development from the phases and capabilities described in the paper.

Originality/Value: The study offers a comprehensive framework for assisting researchers in conceptualizing service business development and operationalizing capabilities. The results provide testable propositions that can be used to guide future research.
Keywords:equipment manufacturers  service business development  dynamic and operational capabilities  business marketing  industrial marketing
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