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Digitalization is revolutionizing the way business is conducted within industrial value chains through the use of Internet of Things (IoT) technologies, intensive data exchange and predictive analytics. However, technological application on its own is not enough; profiting from digitalization requires business model innovation such as making the transition to advanced service business models. Yet, many research gaps remain in analyzing how industrial companies can leverage digitalization to transform their business models to achieve sustainability benefits. Specifically, challenges related to value creation, value delivery, and value capture components of business model innovation need further understanding as well as how alignment of these components drive sustainable industry initiatives. Thus, this special issue editorial attempts to take stock of the emerging research field through a literature review and providing a synthesis of special issue contributions. In doing so, we contribute by developing a framework that communicates and sets the direction for future research by linking digitalization, business model innovation, and sustainability in industrial settings.

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Purpose – The purpose of this paper is to propose a product-service systems (PSS) risk management decision-making framework for PSS operation, which can enable global manufacturing companies to offer PSS successfully. Thus, the authors 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, the authors 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 – The study contributes to the literature in three ways. First, the authors classify PSS operational risks into three categories related to delivery competence risks, technical risks, and behavioural risks. Second, the authors explain conditions under which each risk can be mitigated using different risk management strategies (avoidance, reduction, sharing/transfer, and retention). Finally, the authors combine different risk categorizations, decision criteria, and risk responses into an integrated decision framework of PSS risk management. Originality/value – The novel contribution is developing a PSS risk management decision support framework, which holds theoretical and practical value.

Circular and bio-economy represents a political and industrial initiative to ensure that our society can rely on renewable biological sources while achieving economic growth. However, there is a need to critical review how realistic and feasible such initiatives are towards fulfilling the promised benefits of this economy. The literature on bio-economy often discusses the importance of innovative business models and their role in a successful shift to a bio-economy. Still, much of the discussion that is related to circular business models is fragmented and immature. Therefore, the purpose of this study is to conduct a systematic literature review of circular business model activities and the barriers to a bio-economy. Further, this review provides future research directions for a shift to a bio-economy. This study is based on a systematic review of 42 scientific journal articles and book chapters on a forest-based bio-economy. The business model canvas is used to provide a structured aggregation of the existing circular business models activities being used by the forestry sector. In addition, we develop a framework that describes the barriers to bio-economy-based circular business models and suggest new directions for future research. The study highlights the need for alignment among the elements of a business model as a key condition for its successful implementation in a bio-economy.

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.

PurposeThe purpose of this study is to understand how digital servitization enables the process of internationalization for industrial SMEs.Design/methodology/approachThe present study has adopted an exploratory multiple case study, conducting a total of 40 interviews in a two-phased approach to data collection. The first phase consisted of exploratory interviews with twenty-six industrial SMEs connected to the manufacturing industry in Sweden and Finland. Then, six SMEs were selected in the second phase to participate in additional in-depth interviews.FindingsFirst, this study identifies three gradual enabling phases concerned with the digital service maturity of SMEs consisting of digital awareness, digital service innovation and digital service mass customization. Second, the three interdependent phases of ecosystem knowledge synergy, ecosystem integration and ecosystem value co-creation were identified to improve ecosystem involvement. Finally, a process framework has been developed for SME internationalization consisting of a digital servitization innovation strategy, a digital servitization ecosystem strategy and a digital servitization scaling strategy.Originality/valueThe present research contributes to how digital servitization enables SME internationalization by demonstrating how the development of digital service offerings and ecosystem partnerships supports the internationalization process. This research extends the literature by proposing a process framework for the digital-servitization-enabled internationalization of SMEs. This process perspective provides a richer explanation of the complex interplay between servitization, digitalization and ecosystems choices, which supports the expansion into international markets.

Circular business models (CBMs) have huge potential to deliver economic, social, and environmental benefits, but CBMs have yet to be implemented widely in industrial settings. One reason is that they are often presented as one-size-fits-all solutions, but this is misplaced because product-specific criteria and company capabilities determine the correct choice and implementation of CBMs. Therefore, the purpose of this paper is to investigate how CBM selection and capability development facilitates the implementation of CBMs. For this purpose, we have adopted a qualitative research approach and undertaken 25 explorative interviews in three large Swedish manufacturing companies. In this paper, a CBM implementation framework consisting of two parts has been developed. The first part addresses the choice of the appropriate CBM based on tactical configurations. The second part provides a capability development path by explicating underlying routines that need to be progressively developed in order to move smoothly to more advanced CBMs.