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Servitization as Innovation in Manufacturing—A Review of the Literature

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The Handbook of Service Innovation

Abstract

This chapter provides an overview of select literature on servitization, introduces and defines the concept of servitization, and shows why servitization is becoming a required strategy for manufacturing firms. It discusses the key aspects of servitization as innovation along several different dimensions. The chapter also touches upon what type of services manufacturing firms can offer, as well as the key journeys towards a fully servitized manufacturing firm, and key challenges on these journeys. Servitization is increasing rapidly, and is likely to continue to do so since both the defensive and offensive drivers of servitization are increasing in strength. The literature also points out that the transformation process into a servitized manufacturing firm is both a complex and complicated one, and failure rates are not insignificant. On the positive side, opportunities abound to offer services throughout the value chain, but care has to be taken to ensure that the manufacturing firms’ business model is modified to ensure the implemented service activities are profitable.

This chapter is a selection out of a complete 200 page literature review of the field done by the author.

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Notes

  1. 1.

    Please note that other terms exist in the academic literature, albeit the servitization term seems to dominate.

  2. 2.

    If this phenomenon is presented in a graph with a Y-axis for the value-added and an X-axis for the value chain, the resulting curve appears like a “smile” and hence the name.

  3. 3.

    For a further discussion of this see Anderson and Narus 1995; Auramo and Ala-Risku 2005; Davies 2004; Gebauer et al. 2005; Gebauer and Friedli 2005; Goffin 1999; Howells 2004; Lele 1997; Mathieu 2001a; Mathieu 2001b; Matthyssens and Vandenbempt 1998a; Matthyssens and Vandenbempt 2008; Oliva and Kallenberg 2003; Penttinen and Palmer 2007; Phillips et al. 1999.

  4. 4.

    These drivers are synthesised out of the following studies: Lewis 1942; Levitt 1983; Coyne 1989; Reichheld and Sasser 1990; Knecht et al. 1993; Anderson and Narus 1995; Kalwani and Narayandas 1995; Reichheld 1996; Frambach et al. 1997; van Looy et al. 1998; Goffin 1999; Wise and Baumgartner 1999; Goffin and New 2001; Mathieu 2001b; Nambisan 2001; Munos2002; Homburg et al. 2003; Krishnamurthy et al. 2003; Davies 2003; Oliva and Kallenberg 2003; Henkel et al. 2004; Kalliokoski et al. 2004; Mont 2004; Sawhney et al. 2004; Vargo and Lusch 2004; Windahl et al. 2004; Brax, 2005; Gebauer et al. 2005; Gebauer and Friedli 2005; Slack 2005a, 2005b; Ward and Graves 2005; Malleret 2006; Breunig et al. 2007; Gebauer and Fleisch 2007; Kim et al. 2007; Matthyssens and Vandenbempt 2008; Neely 2008; Reinartz and Ulaga 2008; Baines et al. 2009a, b; Brax and Jonsson 2009; Brege et al. 2009; Schmenner 2009; Kindström and Kowalkowski 2009; Aurich et al. 2010; Slepniov et al. 2010a, b; Isaksson et al. 2011, Neely 2013.

  5. 5.

    In the Service-Dominant Logic field of study.

  6. 6.

    see Roos et al. (2005) Chap. “Open Service Innovation: Literature Review and Directions for Future Research” for an in-depth discussion on how to capture and evaluate resource deployment systems in firms.

  7. 7.

    The structuralist view and the resource-based view of the firm’s competitive advantage; the dynamic capabilities theory; service-based theory of the firm; service-dominant logic and goods-dominant logic; strategic management and the socio-economic view; organizational design.

  8. 8.

    See e.g. Patankar and Mitra 1995; Jack and Murthy 2001; Balachander 2001; Murthy et al. 2004; Balachandran and Radhakrishnan 2005; Cohen et al. 2006; Jack and Murthy 2007; Allon and Federgruen 2009.

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  1. University of Technology Sydney, UTS Business School, Ultimo, NSW, 2007, Australia

    Göran Roos

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  1. UTS Business School, University of Technology Sydney, Broadway, Australia

    Renu Agarwal

  2. University of the Sunshine Coast, Queensland, Australia

    Willem Selen

  3. UTS Business School, University of Technology, Sydney, Australia

    Göran Roos

  4. UTS Business School, University of Technology Sydney, Sydney, Australia

    Roy Green

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Roos, G. (2015). Servitization as Innovation in Manufacturing—A Review of the Literature. In: Agarwal, R., Selen, W., Roos, G., Green, R. (eds) The Handbook of Service Innovation. Springer, London. https://doi.org/10.1007/978-1-4471-6590-3_19

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