Avoiding the Service Paradox : A Capability-Based Framework for Sustained Financial Performance in Triadic Service Ecosystems

Abstract: This thesis aims to enhance the current literature by investigating the causes for the service paradox in service ecosystems and the capabilities required to avoid them. To fulfill this purpose the following research questions were derived: RQ 1: What are the possible key causes for the service paradox for integrated solution providers in a triadic value constellation? RQ 2: What key capabilities allow integrated solution providers to avoid the service paradox in a triadic value constellation? This study used an exploratory, qualitative, single-case study of a service ecosystem, with an abductive research approach. In total, 13 companies within the ecosystem took part in the research, and the data was collected through five unstructured interviews, 19 semi-structured interviews, and one workshop. The result from the interviews was derived using thematic analysis. The findings are divided into three parts. First, we identified four key causes of the service paradox for integrated solution providers in a triadic value constellation. The four key causes are: (1) Cost creep, (2) Unsustainable in-house costs, (3) Brand damage, and (4) Industry-specific factors. Second, we identified five key capabilities for integrated solution providers to mitigate the service paradox. The five key capabilities are: (1) Relational capabilities, (2) Technological capabilities, (3) Learning and communication capabilities, (4) Operational capabilities, and (5) Market capabilities. Finally, the two previous findings were combined into a framework that provides a guide for which key capabilities mitigate which key causes. This study contributes to current servitization literature by deepening knowledge on factors affecting the success of servitization efforts. Furthermore, this study extends the knowledge of how a dynamic and collaborative approach impacts the development of novel servitization solutions. For practitioners seeking to develop integrated solution offerings, the framework developed in this study provides a list of priorities for the servitization effort. The framework also allows managers to evaluate their servitization process and implement quick actions to improve performance.