Exploring servitization in China

Abstract

Purpose-Previous research has predominately focused on the servitization strategies of Western manufacturers in advanced economies, neglecting the potential for servitization in those which are emerging, such as China. This paper explores the role of the external service partner network of a European manufacturer providing services in China, in order to develop a better understanding of the resulting and associated challenges. Design/methodology/approach-An in-depth case study approach was used to examine the parent company, its subsidiary in China and the related service partner network. Data collection involved all three actors and took place in Denmark and China. Findings-The findings suggest that motivation, opportunity and ability (MOA) need not only be mutually reinforcing for the organization attempting to move towards services but also aligned between organizational units, as well as with the service partner network. Furthermore, the findings suggest that while service partners are typically closer to the market, they may not be able to deliver the higher value-added services requiring customization. Research limitations/implications-This study is limited to a single manufacturer attempting servitization in China. Future studies may consider other case firms in other markets. Practical implications-The MOA framework provides a basis for understanding the managerial challenges of aligning and coordinating the MOA elements amongst different actors. Originality/value-This paper contributes by exploring servitization in an emerging market through the MOA framework in order to better understand the challenges and complexities. Servitization is found to be a dynamic phenomenon which should be understood as a movement that is also dependent on an external service partner possessing the necessary capabilities. In turn, this requires understanding the MOAs of all actors in a network and how they may be influenced in order for the MOA elements to be mutually reinforcing.

From Goods to Services and from Linear to Circular: The Role of Servitization’s Challenges and Drivers in the Shifting Process

“…In the case of the drivers, it was found that 10 papers did not identify either a hard driver or a soft driver [57][58][59][60]121,[127][128][129][130][131]; that is, they focused exclusively on the challenges instead of looking for the levers or opportunities that servitization may also bring to firms and that could overcome those challenges. For hard drivers, most papers also focus their findings on technical and market drivers, while economic drivers (less financial volatility, reduced costs in function-based business models) have received less attention.…”

Understanding the influence of servitization on global value chains: a conceptual framework

“…Considering that services need to be offered at the point of consumption, firms may need to enlist the support of local partners, including service suppliers and component suppliers (Raja & Frandsen, 2017) to co-create value with local customers (Lenka et al, 2017). Suppliers provide services to the focal servitizing firm to assist it in providing services to its customers.…”

“…Manufacturers embarking on servitization may also expand by developing an external service partner network in GVCs (Kowalkowski et al, 2011;Raja & Frandsen, 2017). As such, for many manufacturers, growing imperatives necessitate moving beyond firm boundaries, requiring cooperation and a holistic management of inter-firm dependencies (Kowalkowski et al, 2016).…”

“…Lastly, we posit that servitizing firms' dependency on partner organizations will likely increase to realize the effective delivery of services to customers, adding to the need for local embeddedness in GVCs. Such interdependencies require moving beyond the boundaries of servitizing firms and need to be managed (Kowalkowski et al, 2016) with the ongoing need for the coordination and alignment of activities (Raja & Frandsen, 2017).…”

Servitization of manufacturing: survey in the Polish machinery sector

“…One of the key aspects of servitization is to establish and maintain appropriate relationships with customers, which can only be ensured by cooperation with local partners who have knowledge of the local market and customers. The offering of advanced services and solutions often requires additional investments in the development of the skills of external partners (Raja & Frandsen, 2017).…”