The Role of Market-Linking Capabilities for Sustainable PSS Innovation Towards Emerging Markets

Abstract: While shifting towards a more service oriented global economy, Multinational corporations (MNCs) operating in emerging markets start to realize the importance of combining products and services into sustainable product-service systems (sustainable PSS). MNCs should manage sustainable PSS innovation in order to provide customer value in various regional markets over time. To achieve this, regional units needs to develop market-linking capabilities, which enables them to respond and adapt to trends and changes on the market. However, the development of such capabilities can be challenging and prior research has not provided clear findings on how to do this. The purpose of this research was to increase the understanding of how market-linking capabilities can be developed to facilitate sustainable PSS innovation for MNC providers of medical technology in emerging markets. To fulfil this purpose, this research was conducted as a three-month site visit at a MNC’s Chinese sales unit that provides sustainable PSS in the medical technology industry. This company was chosen due to their way of working with sustainable innovation in international markets, and the multiple challenges they face when establishing a sales unit in China. This market is especially difficult due to its differences in the cultural, social, political and legal landscape. Working with sustainable PSS innovation in the medical technology industry is important since it could help overcome challenges related to this. The data collection relied on observations and interviews, which were held with employees at the HQ and sales units within the MNC. Existing literature did not provide any clarification of which market-linking capabilities that are important to possess at regional units, and a model for how to build market-linking capabilities was lacking. This research contribute to existing literature by identifying three important market-linking capabilities in a new, holistic context covering three levels; the internal unit, between different units in the company and between the unit and the external environment. The capabilities identified in this research are; Mutual understanding between the market and the region, Basis for interaction between the region and its internal and external stakeholders and Coordinate regional unit and streamline delivery procedures. It was shown that these capabilities are dynamic and evolve over time. A three-stage model for building these capabilities was identified, which consists of the stages Identify & Create, Use & Understand and Maintain & Develop, each with corresponding activities. The model helps MNCs to meet challenges highlighted by previous researchers and provides Chinese sales units with a springboard for how to coordinate and organize resources.