At your service! A case study on servitization in manufacturing from a dual business model perspective

Abstract: The research on servitization of manufacturers has recently gained new traction as firms increasingly offer combinations of products and services empowered by digital means. As these firms expand their offerings to sell integrated product-services alongside their traditional commerce, they are confronted with having to juggle dual business models. Through a qualitative in-depth case study, we explore the relations between a servitized business model and its traditional transactional counterpart by considering individual elements of the business model. Additionally, we apply concepts from the ambidexterity literature to explain organizational mechanisms in dealing with the challenges of business model duality. Our analysis highlights that the relation between the business models play a key role throughout servitization and that business model elements vary in relevance as servitization progresses. We find that a firm's operational motivation to servitize has an impact on their starting point in servitizing, and that firms can benefit from focusing on their value capturing when beginning to servitize. Furthermore, we suggest that servitizing firms can shift between different modes of ambidextrous organizing and we identify a unique mechanism which we frame as segmented structural ambidexterity. This mechanism captures how a firm can break out individual business model elements to accelerate the firm's progression in servitization.