Digital Servitization as Business Model Innovation: an explorative study on the role of absorptive capacity
Keywords:
Industry 4.0; digital servitization; business model innovation; absorptive capacity; single case study; fashion industryAbstract
Purpose of the paper: The study explores the role of absorptive capacity as a driving factor of digital servitization in the fashion industry.
Methodology: A single case study based on semi-structured interviews with key informants.
Findings: The business model innovation process towards digital servitization started in the value proposition to affect the value creation and value capture dimensions. Significant changes exist in product development, human resources competencies as well as business relationships with customers and suppliers. The firm’s absorptive capacity represents the missing link between Industry 4.0 technologies and digital servitization.
Research limits: A single case study does not allow for statistical generalization. A multiple case study approach would help in enhancing external validity. Besides, increasing the number of interviews and collecting data from other actors (e.g. customers, suppliers, etc.) would allow a broader view.
Practical implications: Developing absorptive capacity might help manufacturing firms in capitalizing the investment in digital technology to develop servitization strategies. The acquisition and assimilation of external knowledge, together with the prior available knowledge, support the provision of value-added services which allow the firm to appropriate value by enhancing its bargaining power and expanding its market.
Originality of the paper: The study contributes to the digital servitization literature by providing empirical evidence on its driving factors. Also, it contributes to the knowledge management literature which calls for studies on absorptive capacity and business model innovation and to the literature on absorptive capacity by investigating a manufacturing firm outside technology-intensive contexts.
References
ARDITO, L., CERCHIONE, R., MAZZOLA, E., RAGUSEO, E. (2021), “Industry 4.0 transition: a systematic literature review combining the absorptive capacity theory and the data–information–knowledge hierarchy”, Journal of Knowledge Management, Vol. ahead-of-print No. ahead-of-print.
AYALA, N.F., PASLAUSKI, C.A., GHEZZI, A., FRANK, A.G. (2017), “Knowledge sharing dynamics in service suppliers' involvement for servitization of manufacturing companies”, International Journal of Production Economics, Vol. 193, pp. 538-553.
BAINES, T.S., LIGHTFOOT, H.W., BENEDETTINI, O., KAY, J.M. (2009), “The servitization of manufacturing: A review of literature and reflection on future challenges”, Journal of Manufacturing Technology Management, Vol. 20, No. 5, pp. 547-567.
BARNEY, J. (1991), “Firm resources and sustained competitive advantage”, Journal of management, Vol. 17, No. 1, pp. 99-120.
BORTOLUZZI, G., CHIARVESIO, M., ROMANELLO, R., TABACCO, R., VEGLIO, V. (2020), “Industry 4.0 technologies and the servitization strategy: a good match?”, Sinergie Italian Journal of Management, Vol. 38, No.1, pp. 55-72.
BUSTINZA, O.F., GOMES, E., VENDRELL-HERRERO, F., TARBA, S.Y. (2018), “An organizational change framework for digital servitization: evidence from the Veneto region”, Strategic Change, Vol.27, No.2, pp.111-119.
CHEN, J., WANG, L., QU, G. (2021), “Explicating the business model from a knowledge-based view: nature, structure, imitability and competitive advantage erosion”, Journal of Knowledge Management, Vol. 25, No. 1, pp. 23-47.
CHICHKANOV, N. (2021), “The role of client knowledge absorptive capacity for innovation in KIBS”, Journal of Knowledge Management, Vol.25, No.5, pp. 1194-1218.
COHEN, W.M., LEVINTHAL, D.A. (1990), “Absorptive capacity: A new perspective on learning and innovation”, Administrative science quarterly, Vol.35, No.1, pp. 128-152.
COREYNEN, W., MATTHYSSENS, P., VANDERSTRAETEN, J., VAN WITTELOOSTUIJN, A. (2020), “Unraveling the internal and external drivers of digital servitization: A dynamic capabilities and contingency perspective on firm strategy”, Industrial Marketing Management, Vol.89, pp.265-277.
COREYNEN, W., MATTHYSSENS, P., VAN BOCKHAVEN, W. (2017), “Boosting servitization through digitization: Pathways and dynamic resource configurations for manufacturers”, Industrial Marketing Management, Vol.60, pp.42-53.
DE MASSIS, A., KOTLAR, J. (2014), “The case study method in family business research: Guidelines for qualitative scholarship”, Journal of Family Business Strategy, Vol. 5, No. 1, pp. 15-29.
EISENHARDT, K.M. (1989), “Building theories from case study research”, Academy of management review, Vol. 14, No. 4, pp. 532-550.
FRANK, A.G., MENDES, G. H., AYALA, N.F., AND GHEZZI, A. (2019), “Servitization and Industry 4.0 convergence in the digital transformation of product firms: A business model innovation perspective”, Technological Forecasting and Social Change, 141, 341-351.
GEBAUER, H., PAIOLA, M., SACCANI, N., RAPACCINI, M. (2021), “Digital servitization: Crossing the perspectives of digitization and servitization”, Industrial Marketing Management, Vol. 93, pp. 382-388.
GEBAUER, H., FLEISCH, E., LAMPRECHT, C., WORTMANN, F. (2020), “Growth path for overcoming the digitalization paradox”, Business Horizons, Vol.63, pp.313-323.
GEBAUER, H., GUSTAFSSON, A., WITELL, L. (2011), “Competitive advantage through service differentiation by manufacturing companies”, Journal of business research, Vol. 64, No. 12, pp. 1270-1280.
GIOIA, D.A., CORLEY, K.G., HAMILTON, A.L. (2013), “Seeking qualitative rigor in inductive research: Notes on the Gioia methodology”, Organizational Research Methods, Vol. 16, No. 1, pp. 15-31.
HUSSAIN, N., BHATTI, W. A., KHAN, S. A., ARSLAN, A., TARBA, S. Y. (2022), “Firm absorptive capacity: multidimensionality, drivers and contextual conditions”, Journal of Knowledge Management, Vol. ahead-of-print No. ahead-of-print.
KOHTAMÄKI, M., PARIDA, V., PATEL, P. C., GEBAUER, H. (2020), “The relationship between digitalization and servitization: The role of servitization in capturing the financial potential of digitalization”, Technological Forecasting and Social Change, Vol. 151, 119804.
KOHTAMÄKI, M., PARIDA, V., OGHAZI, P., GEBAUER, H., BAINES, T. (2019). Digital servitization business models in ecosystems: A theory of the firm. Journal of Business Research, Vol. 104, pp.380-392.
LANE, P.J., KOKA, B.R., PATHAK, S. (2006), “The reification of absorptive capacity: A critical review and rejuvenation of the construct”, Academy of Management Review, Vol. 31, No.4, pp. 833-863.
LIAO, Y., DESCHAMPS, F., LOURES, E.D.F.R., RAMOS, L.F.P. (2017), “Past, present and future of Industry 4.0 – a systematic literature review and research agenda proposal”, International Journal of Production Research, Vol. 55, No. 12, pp. 3609-3629.
MAHMOOD, T., MUBARIK, M.S. (2020), “Balancing innovation and exploitation in the fourth industrial revolution: Role of intellectual capital and technology absorptive capacity”, Technological Forecasting and Social Change, Vol. 160, 120248.
MIROSHNYCHENKO, I., STROBL, A., MATZLER, K., DE MASSIS, A. (2021), “Absorptive capacity, strategic flexibility, and business model innovation: Empirical evidence from Italian SMEs”, Journal of Business Research, Vol. 130,pp. 670-682.
MÜLLER, J.M., BULIGA, O., VOIGT, K.I. (2021), “The role of absorptive capacity and innovation strategy in the design of industry 4.0 business Models-A comparison between SMEs and large enterprises”, European Management Journal, Vol. 39, No.3, pp.333-343.
MÜLLER, J.M., BULIGA, O.,VOIGT, K.I. (2018), “Fortune favors the prepared: how SMEs approach business model innovations in Industry 4.0”, Technological Forecasting and Social Change, Vol. 132, No.2, pp. 2-17.
NAEEM, H.M. DI MARIA, E. (2021), “Customer participation in new product development: an Industry 4.0 perspective”, European Journal of Innovation Management, Vol. ahead-of-print No. ahead-of-print.
OLIVA, R., KALLENBERG, R. (2003), “Managing the transition from products to services”, International Journal of Service Industry Management, Vol. 14, No. 2, pp. 160-172.
PAIOLA, M., SCHIAVONE, F., KHVATOVA, T., GRANDINETTI, R. (2021), “Prior knowledge, industry 4.0 and digital servitization. An inductive framework”, Technological Forecasting and Social Change, Vol. 171, 120963.
PAIOLA, M., GEBAUER, H. (2020), “Internet of things technologies, digital servitization and business model innovation in BtoB manufacturing firms”, Industrial Marketing Management, Vol.89, pp.245-264.
PAIOLA, M. (2018), “Digitalization and servitization: Opportunities and challenges for Italian SMES”, Sinergie Italian Journal of Management, Vol. 36, pp. 11-22.
PASCHOU, T., RAPACCINI, M., ADRODEGARI, F., AND SACCANI, N. (2020), “Digital servitization in manufacturing: A systematic literature review and research agenda”, Industrial Marketing Management, Vol. 89, pp. 278-292.
PORTER, M.E., HEPPELMANN, J.E. (2015), “How smart, connected products are transforming companies”, Harvard Business Review, Vol. 93, No.10, pp. 96-114.
SCHLAGWEIN, D., HU, M. (2017), “How and why organisations use social media: five use types and their relation to absorptive capacity”, Journal of Information Technology, Vol.32, No. 2, pp. 194-209.
TODOROVA, G., DURISIN, B. (2007), “Absorptive capacity: Valuing a reconceptualization”, Academy of Management Review, Vol. 32, No. 3, pp. 774-786.
TRONVOLL, B., SKLYAR, A., SÖRHAMMAR, D., KOWALKOWSKI, C. (2020), “Transformational shifts through digital servitization”, Industrial Marketing Management, Vol.89, pp.293-305.
TSENG, C.Y., HUNG, C.H. (2011), “Knowledge absorptive capacity and innovation performance in KIBS”, Journal of Knowledge Management, Vol.15, No.6, pp. 971-983.
TUKKER, A. (2004), “Eight types of product–service system. Eight ways to sustainability? Experiences from SusProNet., Business Strategy and the Environment, Vol. 13, No. 4, pp. 246–260.
ULAGA, W., REINARTZ, W.J. (2011), “Hybrid offerings: how manufacturing firms combine goods and services successfully”, Journal of Marketing, Vol. 75, No. 6, pp. 5-23.
VOLBERDA, H. W., FOSS, N.J., LYLES, M.A. (2010), “Perspective—Absorbing the concept of absorptive capacity: How to realize its potential in the organization field”, Organization Science, Vol. 21, No. 4, pp. 931-951.
XIE, X., ZOU, H., QI, G. (2018), “Knowledge absorptive capacity and innovation performance in high-tech companies: A multi-mediating analysis”, Journal of Business Research, Vol. 88, pp. 289-297.
YIN R.K., (2014). Case study research: designs and methods, 3rd edition. Thousand Oaks (CA): Sage.
YUAN, R., LUO, J., LIU, M.J., YU, J. (2022), “Understanding organizational resilience in a platform-based sharing business: The role of absorptive capacity”, Journal of Business Research, Vol. 141, pp. 85-99.
ZAHRA, S. A., GEORGE, G. (2002), “Absorptive capacity: A review, reconceptualization, and extension”, Academy of Management Review, Vol. 27, No. 2, pp. 185-203.
AYALA, N.F., PASLAUSKI, C.A., GHEZZI, A., FRANK, A.G. (2017), “Knowledge sharing dynamics in service suppliers' involvement for servitization of manufacturing companies”, International Journal of Production Economics, Vol. 193, pp. 538-553.
BAINES, T.S., LIGHTFOOT, H.W., BENEDETTINI, O., KAY, J.M. (2009), “The servitization of manufacturing: A review of literature and reflection on future challenges”, Journal of Manufacturing Technology Management, Vol. 20, No. 5, pp. 547-567.
BARNEY, J. (1991), “Firm resources and sustained competitive advantage”, Journal of management, Vol. 17, No. 1, pp. 99-120.
BORTOLUZZI, G., CHIARVESIO, M., ROMANELLO, R., TABACCO, R., VEGLIO, V. (2020), “Industry 4.0 technologies and the servitization strategy: a good match?”, Sinergie Italian Journal of Management, Vol. 38, No.1, pp. 55-72.
BUSTINZA, O.F., GOMES, E., VENDRELL-HERRERO, F., TARBA, S.Y. (2018), “An organizational change framework for digital servitization: evidence from the Veneto region”, Strategic Change, Vol.27, No.2, pp.111-119.
CHEN, J., WANG, L., QU, G. (2021), “Explicating the business model from a knowledge-based view: nature, structure, imitability and competitive advantage erosion”, Journal of Knowledge Management, Vol. 25, No. 1, pp. 23-47.
CHICHKANOV, N. (2021), “The role of client knowledge absorptive capacity for innovation in KIBS”, Journal of Knowledge Management, Vol.25, No.5, pp. 1194-1218.
COHEN, W.M., LEVINTHAL, D.A. (1990), “Absorptive capacity: A new perspective on learning and innovation”, Administrative science quarterly, Vol.35, No.1, pp. 128-152.
COREYNEN, W., MATTHYSSENS, P., VANDERSTRAETEN, J., VAN WITTELOOSTUIJN, A. (2020), “Unraveling the internal and external drivers of digital servitization: A dynamic capabilities and contingency perspective on firm strategy”, Industrial Marketing Management, Vol.89, pp.265-277.
COREYNEN, W., MATTHYSSENS, P., VAN BOCKHAVEN, W. (2017), “Boosting servitization through digitization: Pathways and dynamic resource configurations for manufacturers”, Industrial Marketing Management, Vol.60, pp.42-53.
DE MASSIS, A., KOTLAR, J. (2014), “The case study method in family business research: Guidelines for qualitative scholarship”, Journal of Family Business Strategy, Vol. 5, No. 1, pp. 15-29.
EISENHARDT, K.M. (1989), “Building theories from case study research”, Academy of management review, Vol. 14, No. 4, pp. 532-550.
FRANK, A.G., MENDES, G. H., AYALA, N.F., AND GHEZZI, A. (2019), “Servitization and Industry 4.0 convergence in the digital transformation of product firms: A business model innovation perspective”, Technological Forecasting and Social Change, 141, 341-351.
GEBAUER, H., PAIOLA, M., SACCANI, N., RAPACCINI, M. (2021), “Digital servitization: Crossing the perspectives of digitization and servitization”, Industrial Marketing Management, Vol. 93, pp. 382-388.
GEBAUER, H., FLEISCH, E., LAMPRECHT, C., WORTMANN, F. (2020), “Growth path for overcoming the digitalization paradox”, Business Horizons, Vol.63, pp.313-323.
GEBAUER, H., GUSTAFSSON, A., WITELL, L. (2011), “Competitive advantage through service differentiation by manufacturing companies”, Journal of business research, Vol. 64, No. 12, pp. 1270-1280.
GIOIA, D.A., CORLEY, K.G., HAMILTON, A.L. (2013), “Seeking qualitative rigor in inductive research: Notes on the Gioia methodology”, Organizational Research Methods, Vol. 16, No. 1, pp. 15-31.
HUSSAIN, N., BHATTI, W. A., KHAN, S. A., ARSLAN, A., TARBA, S. Y. (2022), “Firm absorptive capacity: multidimensionality, drivers and contextual conditions”, Journal of Knowledge Management, Vol. ahead-of-print No. ahead-of-print.
KOHTAMÄKI, M., PARIDA, V., PATEL, P. C., GEBAUER, H. (2020), “The relationship between digitalization and servitization: The role of servitization in capturing the financial potential of digitalization”, Technological Forecasting and Social Change, Vol. 151, 119804.
KOHTAMÄKI, M., PARIDA, V., OGHAZI, P., GEBAUER, H., BAINES, T. (2019). Digital servitization business models in ecosystems: A theory of the firm. Journal of Business Research, Vol. 104, pp.380-392.
LANE, P.J., KOKA, B.R., PATHAK, S. (2006), “The reification of absorptive capacity: A critical review and rejuvenation of the construct”, Academy of Management Review, Vol. 31, No.4, pp. 833-863.
LIAO, Y., DESCHAMPS, F., LOURES, E.D.F.R., RAMOS, L.F.P. (2017), “Past, present and future of Industry 4.0 – a systematic literature review and research agenda proposal”, International Journal of Production Research, Vol. 55, No. 12, pp. 3609-3629.
MAHMOOD, T., MUBARIK, M.S. (2020), “Balancing innovation and exploitation in the fourth industrial revolution: Role of intellectual capital and technology absorptive capacity”, Technological Forecasting and Social Change, Vol. 160, 120248.
MIROSHNYCHENKO, I., STROBL, A., MATZLER, K., DE MASSIS, A. (2021), “Absorptive capacity, strategic flexibility, and business model innovation: Empirical evidence from Italian SMEs”, Journal of Business Research, Vol. 130,pp. 670-682.
MÜLLER, J.M., BULIGA, O., VOIGT, K.I. (2021), “The role of absorptive capacity and innovation strategy in the design of industry 4.0 business Models-A comparison between SMEs and large enterprises”, European Management Journal, Vol. 39, No.3, pp.333-343.
MÜLLER, J.M., BULIGA, O.,VOIGT, K.I. (2018), “Fortune favors the prepared: how SMEs approach business model innovations in Industry 4.0”, Technological Forecasting and Social Change, Vol. 132, No.2, pp. 2-17.
NAEEM, H.M. DI MARIA, E. (2021), “Customer participation in new product development: an Industry 4.0 perspective”, European Journal of Innovation Management, Vol. ahead-of-print No. ahead-of-print.
OLIVA, R., KALLENBERG, R. (2003), “Managing the transition from products to services”, International Journal of Service Industry Management, Vol. 14, No. 2, pp. 160-172.
PAIOLA, M., SCHIAVONE, F., KHVATOVA, T., GRANDINETTI, R. (2021), “Prior knowledge, industry 4.0 and digital servitization. An inductive framework”, Technological Forecasting and Social Change, Vol. 171, 120963.
PAIOLA, M., GEBAUER, H. (2020), “Internet of things technologies, digital servitization and business model innovation in BtoB manufacturing firms”, Industrial Marketing Management, Vol.89, pp.245-264.
PAIOLA, M. (2018), “Digitalization and servitization: Opportunities and challenges for Italian SMES”, Sinergie Italian Journal of Management, Vol. 36, pp. 11-22.
PASCHOU, T., RAPACCINI, M., ADRODEGARI, F., AND SACCANI, N. (2020), “Digital servitization in manufacturing: A systematic literature review and research agenda”, Industrial Marketing Management, Vol. 89, pp. 278-292.
PORTER, M.E., HEPPELMANN, J.E. (2015), “How smart, connected products are transforming companies”, Harvard Business Review, Vol. 93, No.10, pp. 96-114.
SCHLAGWEIN, D., HU, M. (2017), “How and why organisations use social media: five use types and their relation to absorptive capacity”, Journal of Information Technology, Vol.32, No. 2, pp. 194-209.
TODOROVA, G., DURISIN, B. (2007), “Absorptive capacity: Valuing a reconceptualization”, Academy of Management Review, Vol. 32, No. 3, pp. 774-786.
TRONVOLL, B., SKLYAR, A., SÖRHAMMAR, D., KOWALKOWSKI, C. (2020), “Transformational shifts through digital servitization”, Industrial Marketing Management, Vol.89, pp.293-305.
TSENG, C.Y., HUNG, C.H. (2011), “Knowledge absorptive capacity and innovation performance in KIBS”, Journal of Knowledge Management, Vol.15, No.6, pp. 971-983.
TUKKER, A. (2004), “Eight types of product–service system. Eight ways to sustainability? Experiences from SusProNet., Business Strategy and the Environment, Vol. 13, No. 4, pp. 246–260.
ULAGA, W., REINARTZ, W.J. (2011), “Hybrid offerings: how manufacturing firms combine goods and services successfully”, Journal of Marketing, Vol. 75, No. 6, pp. 5-23.
VOLBERDA, H. W., FOSS, N.J., LYLES, M.A. (2010), “Perspective—Absorbing the concept of absorptive capacity: How to realize its potential in the organization field”, Organization Science, Vol. 21, No. 4, pp. 931-951.
XIE, X., ZOU, H., QI, G. (2018), “Knowledge absorptive capacity and innovation performance in high-tech companies: A multi-mediating analysis”, Journal of Business Research, Vol. 88, pp. 289-297.
YIN R.K., (2014). Case study research: designs and methods, 3rd edition. Thousand Oaks (CA): Sage.
YUAN, R., LUO, J., LIU, M.J., YU, J. (2022), “Understanding organizational resilience in a platform-based sharing business: The role of absorptive capacity”, Journal of Business Research, Vol. 141, pp. 85-99.
ZAHRA, S. A., GEORGE, G. (2002), “Absorptive capacity: A review, reconceptualization, and extension”, Academy of Management Review, Vol. 27, No. 2, pp. 185-203.
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2023-12-22
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