Forming Successful Business-to-Business Services in Goods-Dominant Firms

Abstract

Extant literature is almost unanimous in suggesting that managers in goods-dominant firms should integrate services into their core market offers. Furthermore, in actual practice, numerous firms are striving with mixed results to become “solutions providers” by adding services to their portfolio of tangible goods. The literature does not, however, describe what factors to consider when adding services and how the factors should be designed to enhance organizational performance. The purpose of this study was to isolate and characterize factors that enable the formation of successful business-to-business (B2B) services in goods-dominant firms. Using a multicase research design, this study highlights four substantive cases of Fortune 500 firms in which B2B service development was a process of aligning strategy with a highly complex market. The study then illustrates how firms that demonstrate a record of successful B2B service development adapt several factors of organization to align with the newly formed strategy.

A Reconceptualization of Manufacturers' Service Strategies

“…However, Services Pragmatists might also provide productattached services on other OEMs' products where this does not adversely affect sales of their own products, although this option is less common. Services Enthusiasts offer all three categories of service offerings and predominantly come from the office machinery and computer sector, supporting other studies which have emphasised the importance of service infusion for this group (Neu and Brown 2005). Manufacturers in this cluster have set up independent service business units, supporting finding from other studies (Gebauer and Kowalkowski 2012;Raddats and Burton 2011).…”

“…Pragmatists provide services on their own products to enhance what they already perceive as differentiated products (a 'defend' strategy, Auguste et al 2006), with services run from combined product/service business units (supporting Neu and Brown 2005). If the manufacturer's principal strategy is to defend and grow the product business, services are generally seen as add-ons, or even 'a necessary evil' Robinson, Clarke-Hill, and Clarkson 2002) needed to ensure future product sales.…”

A Delphi study to explore the adoption of servitization in UK companies

“…These organisations are services providers who are also technology innovators. These innovation capabilities manifest as research, design and production processes that result in intellectual property that differentiates these organisations from more conventional services providers (Windahl et al, 2004;Neu and Brown, 2005;and Sumi and Kitatani, 2014).…”

Service innovation in manufacturing firms: Evidence from Spain

“…This process is seen as being driven by ever more complex customer demands and a need to defend against competition. In effect, manufacturing firms become service providers (Lay et al, 2009), a shift that requires them to change their strategies and develop new business concepts (Neu and Brown, 2005). A diverse range of servitisation examples can be found in the literature on car manufacturers, aerospace industry, machine tools, printing machinery and other capital equipment (Baines et al, 2009).…”