Match or Mismatch: Strategy-Structure Configurations in the Service Business of Manufacturing Companies

Abstract

A new trend seems to be emerging for multinational manufacturing companies to make a strategic reorientation into becoming service providers. For some companies, such as Kone and IBM, the revenues from services are 50% or more of their total sales. Despite the increasing interest in exploring various aspects of the service part of the business in manufacturing companies, existing research has not focused on the interdependencies between different service strategies and organizational designs. This article studies different service strategies in manufacturing companies and highlights the organizational design necessary for implementing each service strategy. The service strategies explored are aftersales service providers, customer support service providers, outsourcing partners, and development partners. Each service strategy is supported by organizational design factors related to the service orientation of corporate culture, the service orientation of human resource management, and the service orientation of organizational structures. This research concludes that a specific strategy-structure configuration is needed in order to succeed with a chosen service strategy.

Understanding the role of technology in service innovation: Comparison of three theoretical perspectives

“…The two models were compared using the PNFI and PGFI because the CFI does not account for parsimony. GIF indices > 0.90 typically translate to parsimonious fit indices of less than 0.60 (Gebauer et al, 2010) because the PNFI and PGFI used for model comparison exhibit differing degrees of freedom are determined by both the GIF of the models and their parsimony. Table 5 shows significant differences in PNFI and PGFI values between the first model and the second model.…”

Inside service-intensive projects: Analyzing inbuilt tensions

“…Today, economic exchange rarely dissolves after project handover and many project-based companies actually earn more revenues from project-related services than from the core project delivery (Gebauer et al, 2010;Salonen, 2011). The projects we have studied empirically can be described as service-intensive as they offer a wide variety of services from basic maintenance to more sophisticated development and consulting.…”

Competitive advantage through service differentiation by manufacturing companies

“…In response to changing market conditions, manufacturing companies have traditionally become more customer-centric and innovative, in a way that customers receive products that better fit their needs (Deshpande et al, 1993;Drucker, 1954;Johnson and Selnes, 2004;Narver and Slater, 1990;Treacy and Wiersma, 1993). In addition, manufacturing companies have started adding more services to their total offerings as part of a differentiation strategy (Gebauer et al, 2010;Neu and Brown, 2005;Oliva and Kallenberg, 2003,). Companies with greater reliance on the service part of their business reportedly achieve better return on sales and improve their value (Fang et al, 2008).…”