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SUMMARY:(REVISITING) SERVITIZATION:  WHEN IS SERVICE ORIENTED BUSINESS MOD
 EL INNOVATION EFFECTIVE? - Ivanka Visnjic\, Department of Managerial Econo
 mics\, Katholieke University Leuven
DTSTART:20091020T110000Z
DTEND:20091020T130000Z
UID:TALK18500@talks.cam.ac.uk
CONTACT:Peter Wild
DESCRIPTION:Servitization\, a tendency of manufacturing firms to extend th
 eir product offerings towards providing services is becoming one of the mo
 st prevalent trends in industrial and high tech sectors (Fang 2009\, Tuly 
 2008\, Cusumano 2003). While early service management literature offered p
 lausible rationales for his phenomenon - and hence outlined expected econo
 mic and strategic benefits (Bowen et al. 1989\; Vandermerwe and Rada.1989\
 ; Heskett 1987\; Quinn 1986\; Chase 1981\; Levitt 1980) -  some of the mor
 e recent findings indicate that servitized firms face serious implementati
 on hurdles that even may result in a decline of overall performance (Neely
  2009\; Gebauer et al. 2005\;  Oliva and Kallenberg 2003).\n\nWithin this 
 contribution\, we intend to add to our understanding of this “service pa
 radox” by relying on constructs forwarded by organizational and economic
  theory. We conceptualize servitization as a business model innovation in 
 services (Zott and Amit 2008)\, whereby product and service activities rep
 resent strategic complements (Siggelkow 2003\, Milgrom and Roberts 1990\, 
 1995). Building on this  notion\, we further argue that depending on imple
 mentation practices\, servitization offers economies of scope in both prod
 uction and consumption\, resulting in an efficient and sustainable strateg
 y for manufacturing firms (Tanriverdi et al. 2008\, 2004\; Cotrell et al. 
 2004\; Milgrom and Roberts 1990\, 1995\; Teece 1982\, Panzaar 1979). \n\nW
 hen testing our propositions on product and service performance data of 48
  national subsidiaries of a large international equipment manufacturing co
 mpany by means of fixed effect panel data model\, the presence of positive
 \, strategic\, complementarities becomes apparent. Moreover\, adopting mor
 e sophisticated service models generates additional beneficial effects.\nI
 n the second part of the analysis\, we focus on effective implementation a
 nd we outline the organizational practices enabling the enactment of posit
 ive complementarities.  Based on in depth case studies (12 subsidiaries of
  the same firm)\, we build a process model that reveals  implementation ac
 tivities\, critical for the success of servitization (Bitner 2008\; Van De
  Ven and Poole 2007\; Hammer 1999\, 1990). The process model implies the i
 nference of desirable structural characteristics of the servitized manufac
 turer\; the necessity to balance the dimensions of vertical\, manufacturin
 g organization with the ones  of a horizontal\, customer oriented firm bec
 omes apparent (Gebauer 2007\; Neu et al. 2005\, Galbraith 2002\, Matthieu 
 2001\; Daft 1997\, Mintzberg 1993\, Lawrence and Lorsch 1967). Managerial 
 implications of the choice of the business model\, the relevance of suppor
 tive organizational arrangements\, as well as directions for further resea
 rch will be discussed.\n
LOCATION:Seminar Room One\, Institute for Manufacturing
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