Eva Lexutt

Success and Failure of Servitization

Dissertation

Fakultät für Wirtschafts-wissenschaft

Success and Failure of Servitization

Inauguraldissertation

Zur Erlangung des akademischen Grades

eines Doktors der Wirtschaftswissenschaft

(Dr. rer. pol.)

Der Fakultät für Wirtschaftswissenschaft

der FernUniversität in Hagen

vorgelegt von

Eva Lexutt, M.Sc.

Hagen, im April 2019

Erstgutachterin: Univ.-Prof. Dr. Sabine Fließ

Zweitgutschterin: Univ.-Prof. Dr. Ulrike Baumöl

Tag der Disputation: 05. September 2019

I

Danksagung

An erster Stelle gilt mein Dank meiner Doktormutter Frau Prof.-Dr. Sabine Fließ, die mich

während des gesamten Prozesses mit wertvollem wissenschaftlichem Input unterstütz hat,

stets ein offenes Ohr hatte und immer an mich geglaubt hat.

Meinen lieben Kolleginnen und Kollegen Stefan Dyck, Salome Zimmermann, Sarina Nennin-

ger, Laura Zwiehoff, Maarten Volkers und Martin Eggert, die mich in zahlreichen Flurgesprä-

chen und Diskussionsrunden sowohl moralisch als auch fachlich unterstütz haben und immer

wertvolles Feedback gegeben haben gilt ebenfalls mein besonderer Dank.

Danken möchte ich außerdem allen Personen, die im Laufe der Jahre Feedback zu meiner

Forschung gegeben haben, mich inspiriert und die Qualität meiner Veröffentlichungen positiv

beeinflusst haben. Dies sind, unter anderem aber nicht ausschließlich, Herr Prof.-Dr. Rolf

Weiber, Herr Prof.-Dr. Frank Jacob und die weiteren TeilnehmerInnen unserer gemeinsamen

Doktorandenseminare, die Qualitative Comparative Analysis and Fuzzy Sets Community, die

anonymen Reviewer meiner Konferenzbeiträge und Veröffentlichungen und die Community

der Spring Servitization Conference.

Abschließend danke ich meiner Familie, Beatrix Lexutt, Walter Lexutt, Yvonne Finken und

Ferdinand Finken, die eine große Stütze in meinem Leben sind. Meiner lieben Cousine An-

nette Herold ein herzlicher Dank fürs Korrekturlesen und stetiges Mifiebern. Meinem besten

Freund und wunderbarem Partner, Tudor Oprea, der mich durch alle Höhen und Tiefen be-

gleitet, mir den Rücken gestärkt und felsenfest an mich geglaubt hat bin ich ebenfalls zutiefst

dankbar.

II

Table of contents

Abbreviations ....................................................................................................................... III

Tables and Figures .............................................................................................................. IV

1. Introduction ..................................................................................................................... 1

1.1 The drivers of servitization ....................................................................................... 1

1.2 Servitization as organizational transformation ......................................................... 7

1.3 Formulating the research question......................................................................... 14

1.4 Conceptual and methodological considerations for success factor research ........ 18

1.5 The structure of this dissertation ............................................................................ 27

2. Paper 1: How to be successful with servitization – guidelines for research and management ........................................................................................................... 30

3. Paper 2: Different roads to servitization success – a configurational analysis of financial and non-financial service performance .................................................. 31

4. Paper 3: Overcoming the service paradox – a configurational analysis ................. 32

5. Concluding remarks ...................................................................................................... 33

5.1 Summary of findings and contribution to research ................................................. 33

5.2 Limitations and future research .............................................................................. 39

References ........................................................................................................................... 43

Curriculum Vitae .................................................................................................................. 57

Statement (Erklärung) ......................................................................................................... 61

III

Abbreviations

fsQCA Fuzzy set qualitative comparative analysis

PSS Product service system

QCA Qualitative comparative analysis

SDL Service dominant logic

SSC Services supporting the client’s activities

SSP Services supporting the product

IV

Tables and Figures

Table 1: Drivers of servitization ............................................................................................... 3

Table 2: Methodology and complex causality ....................................................................... 24

Figure 1: The product-service-continuum ................................................................................ 6

Figure 2: Conceptual framework of articles 2 and 3 ............................................................ 211

1

1. Introduction

1.1 The drivers of servitization Servitization generally describes the transformation of a manufacturing company from prod-

uct-provider to becoming a service- or solutions-provider. The term was introduced in 1988

by Vandermerwe & Rada, who defined it as „the increased offering of fuller market packages

or bundles of customer focused combinations of goods, services, support, self-service and

knowledge in order to add value to core product offerings” (Vandermerwe & Rada 1988, p.

316). The phenomenon itself, however, has antecedents that go back 150 years

(Schmenner, 2009). Then, the bundling of goods and services predominantly aimed at estab-

lishing market entry barriers by controlling the supply chain, and was pursued mostly by the

weaker manufacturers in the market (Schmenner, 2009).

Nowadays, servitization is a global trend in manufacturing (Lay, Copani, Jäger, & Biege,

2010), both in industrialized as well as developing economies (Xing, Liu, Tarba & Cooper,

2017), and for large as well as for small- and medium-sized companies (Paiola, Gebauer &

Edvardsson, 2012). This dissertation focuses on industrialized economies and specifically

examines servitization in German manufacturing companies.

Most manufacturers offer some kind of service (Neely, 2008; Lay et al. 2010; Dachs et al.

2014). A recent international comparative study of 42,505 firms belonging to different coun-

tries and industries found that 25.35 % of the 4,067 examined German firms were servitized

(Neely, 2013). This is generally comparable to the level of servitization in other industrialized

economies, such as France, UK and USA (Neely, 2013). However, other studies found that

the service turnover is still comparatively low (Dachs et al., 2014; Neely, 2013) and mostly

product related services are offered, indicating a low maturity of the service strategies (Lay et

al., 2010).

Prominent examples of servitizing companies are IBM, General Electric, Rolls Royce, Kone,

ABB, and Caterpillar. Servitization is predominantly researched in the manufacturing sector,

with mechanical engineering and electrical engineering the most widely represented sectors

(Fliess & Lexutt, 2019). In Germany, the highest levels of servitization are found in the indus-

trial manufacturing sector, specifically in construction and engineering (56.30 % servitized

companies), construction and farm machinery (50.88% servitized companies), heavy electri-

cal equipment (49.25% servitized companies), aerospace and defense (49.09% servitized

companies), and industrial machinery (42.37% servitized companies) (Neely, 2013). But also

organizations in other industries, such as software (Valtakoski & Witell, 2018), energy (Lüt-

2

jen, Tietze & Schultz, 2017), or publishing (Fliess & Hagenhoff, 2017) increasingly add ser-

vices to their core offering.

Generally, industries with complex, highly customized products are most suitable for serviti-

zation (Dachs et al., 2014). This is why it is predominantly a phenomenon of the business-to-

business sector. While the shift from goods to services is also observed in business-to-

consumer markets, in this context it is usually discussed as diversification or as the evolution

towards a service dominant logic (Vargo & Lusch, 2004). The term servitization, as well as

related terminology such as service transition, service infusion, hybrid offerings, or integrated

solutions, is mostly used to describe the phenomenon in a business-to-business context. The

present dissertation follows this approach, focusing on servitization in business-to-business

markets. A detailed discussion of terminology and definitions is given in Chapter 2 (Fliess &

Lexutt, 2019, p. 60 ff.).

Why is the phenomenon of servitization so prevalent in manufacturing? Table 1 provides an

overview of the drivers of servitization discussed in the literature. Manufacturers add services

to their offering mostly for financial reasons (Oliva & Kallenberg, 2003; Fliess & Lexutt,

2016). Starting point is usually the installed base, i.e. existing machinery installed by the pro-

vider, which provides opportunities for added services, due to the long lifecycle of the exist-

ing products. Services such as maintenance, repair or spare parts management facilitate the

generation of additional consistent and reliable revenue (Oliva & Kallenberg, 2003).

Services generally have higher profit margins than products (Martin & Horne, 1992; Oliva &

Kallenberg, 2003). Due to standardization and high competitive pressure, particularly from

low-cost economies which possess an inherent cost advantage over industrialized econo-

mies, products are susceptible to deteriorating prices (Martin & Horne, 1992; Oliva & Kallen-

berg, 2003). As price pressure increases, the potential profit margin for products decreases.

Services do not face the same pressures, as they are more heterogeneous and not easily

copied or standardized, thus rendering them less sensitive to price declines and allowing for

higher profit margins (Martin & Horne, 1992; Oliva & Kallenberg, 2003).

Services also generate more stable revenue flows (Fang et al., 2008; Gebauer & Friedli,

2005). Sales of large equipment and machinery are susceptible to economic fluctuations

(Anderson et al., 2009). These products constitute large investments for the customer and

have a long lifetime. In times of economic recession, customers will delay the replacement of

older machinery, meaning that their demand declines. Instead, they will choose to prolong

the lifetime of the product with services such as maintenance, upgrades or refurbishments,

increasing the demand for services. Service contracts are usually made for a predetermined

3

time period, specifying reoccurring maintenance or even refurbishment of a given product.

These ideally take place during the entire lifetime of the equipment. In comparison to the

large, but infrequent equipment sales, service contracts might be smaller in volume, but they

are sold more frequently. Consequently, services have the potential to generate stable, pre-

dictable revenue, therefore helping in balancing out the cash flow (Fang et al., 2008; Gebau-

er & Friedli, 2005).

Status quo in manufacturing Drivers for servitization Existing installed base with long-lasting products

Opportunity to generate additional rev-enue through servicing the installed base Financial

Standardization and deteriorating prices Higher profit margins of services

Product sales are highly susceptible to economic fluctuations

Service contracts generate stable reve-nue flows and ensure cash flow

Increasing competitive pressure Higher product sales through services

Differentiation through services Com

petitive Ad-

vantage

Improved customer relationships and retention through customer integration

Products are susceptible to imitation Improved product and service innova-tions through customer integration

Entry barriers through services

Customers desire to focus on core-competencies

Increased demand for services due to outsourcing of peripheral activities

Dem

and for ser-vices

Customers desire to improve own op-erations

Increased demand for complex and customized services

Table 1: Drivers of servitization

Services can also lead to higher product sales (Visnjic & VanLooy, 2013). The products sold

by servitizing companies are often complex and of particular importance for the operation of

the customer organization (Visnjic & VanLooy, 2013). By adding services to these products,

providers can for example optimize their output or their cost efficiency by educating the cus-

tomer on the proper operation of the equipment; minimize downtime through proactive

maintenance that anticipates problems before they occur; or prolong their lifecycle through

refurbishment and upgrading (Visnjic & VanLooy, 2013). This increases the attractiveness

and value of these products for the customer and can lead to increased demand for them

(Visnjic & VanLooy, 2013).

4

Similarly, services are a way for providers to differentiate their offering (Cusumano, Kahl &

Suarez, 2015; Fliess & Lexutt, 2016). Product offerings are more susceptible to imitation by

competitors, leading to their commoditization, i.e. competition solely based on the lowest

price (Matthyssens & Vandenbempt, 2008). By adding services, manufacturers can increase

the value generated for the customer, as explained above (Visnjic & VanLooy, 2013). This

differentiates their offering in comparison to a purely product-based offering and thus im-

proves their competitive position, as it is now not only based on price but on unique value for

the customer (Matthyssens & Vandenbempt, 2008). Services are also considered more diffi-

cult to imitate than products, as they are intangible and co-created together with the custom-

er (Engelhardt, Kleinaltenkamp & Reckenfelderbäumer, 1993). Consequently, they contribute

to building and maintaining a competitive advantage for the provider (Eloranta & Turunen,

2015).

Services are characterized by co-creation, meaning that the customer is involved in the ser-

vice creation and delivery process (Engelhardt et al., 1993; Moeller, 2008). Consequently,

service providers cooperate more intensively with their customers. Such close interaction can

lead to higher commitment, loyalty, and retention (Jacob, Kleipass & Pohl, 2014), but also to

better product and service innovations (Gebauer, Krempl, Fleisch & Friedli, 2008), ultimately

strengthening the provider’s competitive advantage.

Offering services can also contribute to establishing market entry barriers by creating switch-

ing costs for the customers (Eloranta & Turunen, 2015). The closer cooperation between

provider and customer due to customer integration and co-creation also means that the cus-

tomer becomes more dependent on the provider (Helander & Möller, 2008). As the service

offering is created in cooperation with a specific provider in order to meet specific needs of

the customer, changing the supplier would mean a loss of the value that is created in the

existing relationship (Helander & Möller, 2008). Cosequently, customers tend to be more

loyal (Jacob et al., 2014) and reluctant to change suppliers, making it difficult for new com-

petitors to enter the market (Eloranta & Turunen, 2015).

The growing demand for services is another driver of servitization (Fliess & Lexutt, 2016).

Customer organizations face increasing competitive pressure as well and therefore seek

ways to strengthen their competitive position. One way to achieve that is to focus on core

competencies and activities that create value for the organization (Gebauer, Wang, Becken-

bauer & Krempl, 2007). By outsourcing peripheral service activities, managers don’t have to

use their limited time and attention to deal with operations that are not part of the organiza-

tions core business (Ehret & Wirtz, 2010). Instead, they can utilize the unlocked capacity to

5

strengthen the core business and to find new ways to create value for their organization (Eh-

ret & Wirtz, 2010).

Furthermore, customers are searching for ways to reduce costs and optimize their own oper-

ations to strengthen their competitive position. This results in more complex customer needs

and a demand for increasingly sophisticated and customized services (Baines et al., 2009).

Services like preventive maintenance, condition monitoring, refurbishments and recycling

optimize the functioning of the product or prolong its lifetime, ultimately lowering the overall

life-cycle cost and/or the cost of product functioning for the customer (Visnjic & Van Looy,

2013). In the case of use- or result-based services, where the customer does not acquire

ownership of the physical product but the right to use it (e.g. leasing) or to use its output (e.g.

performance based contracts), services even relieve customers from the cost of asset own-

ership (Ehret & Wirtz, 2010). Other services, such as process-oriented engineering, research

and development services, or training and consulting aim to improve the customer’s own

processes, sometimes going as far as taking responsibility for entire parts of the customer’s

operations (Visnjic & Van Looy, 2013).

While these drivers are generally accepted in the literature, they are part of a mainstream

narrative of servitization (Luoto, Brax & Kohtamäki, 2017). Further research is needed to

examine whether they hold true also in non-mainstream research settings, such as develop-

ing economies and different industries, and whether additional drivers of servitization are

identified as the research field broadens and matures (Luoto et al., 2017). This is however

not the focus of this thesis.

The discussed reasons lead manufacturers to refocus their business from purely manufactur-

ing- and product-based to more service- and solution oriented. It is often assumed that this

transformation takes place along the so-called “product-service continuum” (Oliva & Kallen-

berg, 2003, p. 162). As shown in Figure 1, the starting point is the product, with services

merely considered as add-ons. The right end of the continuum is characterized by a com-

plete focus on services, with the product considered as an add-on. The extent and kind of

service offering is often used as an indicator of different stages along the product-service

continuum (Brax & Visintin, 2017). Servitization encompasses offering product-related ser-

vices at the earlier phases of the continuum, such as product documentation, product deliv-

ery, product installation, product repair and spare parts delivery; as well as more advanced

services, such as condition monitoring, preventive maintenance, training, consulting, re-

search and development services, integrated solutions and managing and operating custom-

er operations, as companies move towards the right-hand side of the continuum (Fliess &

Lexutt, 2019).

6

Even though more recent research has shown that different service offerings usually coexist,

the transition towards services is not always linear and sometimes even moves backwards

(Finne & Holmström, 2013; Fundin, Witell & Gebauer, 2012), the notion of the product-

service continuum is still commonly adopted. The number and the names of the stages differ

from author to author. However the core assumption remains that the relative importance of

services increases as the company moves along the continuum, and the offered services

become increasingly complex (Luoto et al., 2017; Lütjen et al., 2017). A more detailed dis-

cussion on how the transition from product- to service-provider is presented in the literature

is given in Chapter 2 (Fliess & Lexutt, 2019, p. 60 ff.).

Figure 1: The product-service-continuum, Oliva & Kallenberg, 2003, p. 162

Figure 1 indicates that advancing along the product-service continuum requires profound

changes in the organization. This is discussed in the next section.

7

1.2 Servitization as organizational transformation Servitization is an inherently interdisciplinary research stream, which draws knowledge main-

ly from four research communities: services marketing, operations management, product-

service systems, and service science and engineering (Baines, Lightfoot, Peppard et al.,

2009; Lightfoot, Baines & Smart, 2013; Rabetino, Harmsen, Kohtamäki & Sihvonen, 2018).

These research communities are not clear-cut, with many servitization-related studies trans-

cending the boundaries of the different research streams (Rabetino et al., 2018). Similarly,

the present dissertation draws knowledge from all four of these research streams. It is, how-

ever, most strongly influenced by the services marketing and operations management litera-

ture, and can be positioned among the latter as mainstream servitization research.

While based on different research traditions, implicitly or explicitly all the servitization-related

communities recognize that servitization encompasses a profound change for the organiza-

tion. They do however focus on different aspects of servitization-induced organizational

change and challenges and pursue different research priorities. This is discussed in this sec-

tion.

The services marketing community is founded on the assumption that services are inherently

different to products (Shostack, 1977). Particularly service marketing scholars from the USA

argue that the difference between products and services stems from the fact that services

are intangible and heterogeneous, their production and consumption is inseparable, and they

are perishable (Fisk, Brown & Bitner, 1993). This view was challenged by Lovelock &

Gummeson (2004), who argued that the main difference lies in the exchange of services not

resulting in a transfer of ownership, but rather in providing access or temporary possession.

Services marketing research from Germany considers intangibility and customer integration

the constituting characteristics of services (Kleinaltenkamp, 1998).

Since 2004, this research stream is strongly influenced by the service-dominant logic (SDL,

Vargo & Lusch, 2004), which introduced a new conceptualization of value. According to the

SDL, value is not embedded in the providers’ output, but defined by and co-created with the

customer (Vargo & Lusch, 2004). This is why it is argued that basically all business is service

business, and all research and practice should break free from the goods-dominant logic of

output exchange (Vargo & Lusch, 2004). While widely acclaimed and intensively cited, the

SDL has also been criticized, particularly for its lack of real-life managerial implications.

Stauss (2005) referred to it as a Pyrrhic victory, claiming that it does not recognize the fun-

damental difference between production and consumption when it comes to goods and ser-

vices.

8

In the context of servitization, the differentiation of products through the offering of services,

as well as the creation of customer value through services are main research topics (Light-

foot, Baines & Smart, 2013). Also the service-dominant logic has been applied to servitiza-

tion (Green, Davies & Ng, 2017).

From a services marketing perspective, servitization changes the source of competitive ad-

vantage from a material, tangible product to an immaterial, intangible service. This changes

the competitive dynamics, as traditionally manufacturing-based companies might find them-

selves competing in different industries and potentially with new and unusual rivals, such as

their customers or their suppliers (Vandermerwe & Rada, 1988).

The reorientation towards services can also be framed as a change in the provider’s value

proposition (Matthyssens, Vandenbempt & Weyns, 2009). Changing the nature of the value

offering from products to services or solutions means that mutual value creation with the cus-

tomer becomes the focus of the provider’s business (Grönroos & Helle, 2010). The value a

provider can create in a customer relationship depends on the value that this customer can

create in the same relationship (Grönroos & Helle, 2010). Consequently, in order to achieve

high mutual value, all provider activities and processes need to be coordinated with the cus-

tomer’s activities and processes with the aim to support the customer’s processes and busi-

ness outcomes (Grönroos & Helle, 2010). This requires a high level of system integration

capabilities from the provider as well as the customer’s willingness to co-evolve (Mat-

thyssens, Vandenbempt & Weyns, 2009). Such close integration of customer and provider

processes and activities can blur the boundaries between supplier and customer organiza-

tion (Macdonald, Kleinaltenkamp & Wilson, 2016). As a consequence, the provider’s ap-

proach to market research, account management, solution design, quality control and value-

auditing might change significantly (Macdonald, Kleinaltenkamp & Wilson, 2016). Finally, in

the case of result- or use-oriented services, servitization also means that customers have to

change their mindset regarding product ownership, accepting that it is not always required in

order to derive value from an offering (Neely, 2008).

Furthermore, servitization changes the focus of the business from transaction to relationship

based (Oliva & Kallenberg, 2003) as the relationship to the customer grows in significance.

The reorientation towards services means that manufacturers have to deal with customer

integration, i.e. the integration of the customer at different levels of the service development,

production and delivery processes (Moeller, 2008). Open and intense communication with

the customer, beginning early in the process and continuing throughout the service relation-

ship, is needed to support customer integration (Brax, 2005; Salonen, 2011). A well-

functioning, collaborative relationship with the customers becomes particularly important

9

(Brax & Johnsson, 2009). Manufacturers becoming service- or solution-providers must there-

fore adopt a customer centric approach and engage in a close dialogue with their customers

(Salonen, 2011; Davies, 2004).

Motivating the customer to co-produce can often be challenging (Brax, 2005; Matthyssens &

Vandenbempt, 2008). Customers’ perceptions of their own participation might differ from the

provider’s expectations (Helander & Möller, 2008). They might not be able or willing to inte-

grate themselves in the process, either due to a lack of trust, or because they want to main-

tain full control over their own processes (Fliess, 1996). Another inhibitor might be different

expectations and attitudes regarding services, including customers’ willingness to pay for

them or to share information (Matthyssens & Vandenbempt, 2010).

The operations management community is the largest and most widely cited field when it

comes to servitization-related research (Baines, Lightfoot, Peppard et al., 2009). Operations

management is a broad field that traditionally focuses on production and productivity-oriented

analyses for efficiency improvements (Lightfoot et al., 2013). However, applying manufactur-

ing management concepts to service organizations is problematic, due to the different char-

acteristics of service industries (Heineke & Davis, 2007). Specifically, the processural nature

of service production and delivery warrants special consideration (Fliess, 2006).

This community is considered the mainstream servitization community (Rabetino et al.,

2018). Servitization research concentrating on industrial services, operations strategies and

supply chain management is most closely connected to operations management (e.g. Bene-

dettini, Neely & Swink, 2015; Johnstone, Wilkinson & Dainty, 2008; Bustinza, Parry & Ven-

drell-Herrero, 2013). But also research on servitization paths (e.g. Oliva & Kallenberg, 2003),

service-led competitive strategies (e.g. Matthyssens & Vandenbempt, 2010) and integrated

solutions (e.g. Davies, 2004) belongs to this research stream (Rabetino et al., 2018).

From an operations management perspective, servitization affects the different elements of

an organization. The focus is not as much on the source of value creation and the customer

relationship but rather on the practical implications of the respective changes for the provider

organization. Due to the broad nature of this research field, the examined changes span a

wide area of topics, starting from the provider’s strategy, structure and organizational culture,

over to human resource management, research & development, and sales & marketing, as

well as organizational capabilities (Fliess & Lexutt, 2019). The company-related factors dis-

cussed in Chapter 2 (Fliess & Lexutt, 2019, p. 63 ff.) represent this category. The configura-

tional models presented in Chapters 3 (Lexutt, 2019a, Article in Press) and 4 (Lexutt, 2019b,

p. 3 ff.) are built based on conditions belonging to this category of changes.

10

Assigning strategic importance to the service offering is an essential step of servitization,

meaning that the strategic focus of the servitizing organization shifts from products to ser-

vices (Oliva & Kallenberg, 2003). This usually comes with the formulation of service-related

strategies and goals (Gebauer & Fleisch, 2007) and the establishment of service-oriented

performance criteria (Wikham, Ljungberg & Styhre, 2013). A change in the strategic orienta-

tion of the company and the associated shift of managerial attention and commitment has a

profound impact on the way of doing business (Vandermerwe & Rada, 1988) and on the dif-

ferent elements of organizational architecture (Mintzberg, 1990; Nadler et al., 1992).

All elements of the organizational architecture – structure, culture, people, and processes –

are impacted by servitization (Neu & Brown, 2008). For services to gain a strategic role, they

have to be accommodated somehow in the organizational structure. This can be realized

through horizontal differentiation by creating a separate service organization with profit-and-

loss responsibility (Oliva, Gebauer & Brann, 2012) or through vertical differentiation by as-

signing leadership roles and decision-making authority to service managers and employees

(Neu & Brown, 2008). Creating and delivering services requires higher levels of cross-

functional communication and information sharing (Antioco, Moenaert, Lindgreen, & Wetzels,

2008) which have to be enabled by the structure as well as the organizational culture.

It is generally recognized that servitization comes with a cultural reorientation, from a trans-

action-centered production culture to a relationship-oriented service culture (e.g. Brax, 2005;

Salonen, 2011). Changing an organization’s culture is considered particularly difficult

(Nuutinen & Lappalainen, 2012). Building a service-oriented service culture means encorpo-

rating the importance of services in the value-system of the company, and facilitating, en-

couraging and rewarding service-oriented attitudes and behavior (Homburg, Fassnacht &

Guenther, 2003; Gebauer, Edvardsson, & Bjurko, 2010).

A change in organizational culture goes hand-in-hand with changes in human resource man-

agement. Servitization shifts the focus of recruitment towards service-related characteristics,

such as flexibility, resilience, the ability to empathize and build relationships with customers,

and technical adeptness (Johnstone, Wilkinson & Dainty, 2014). Employees and particularly

sales personnel need to be educated and trained in service orientation and service selling

(Paiola et al., 2013) while the reward and incentive system should encourage service-

oriented behavior (Neu & Brown, 2005).

As also discussed in the services marketing literature, the active integration of customers into

the service process is a fundamental consequence of servitization (Martin & Horne, 1992).

This process involves all customer and provider activities, starting from the first contact and

extending to the service delivery (Fliess & Kleinaltenkamp, 2004). Servitization therefore im-

11

pacts on innovation and development processes, production processes, information pro-

cesses, customer relationship processes, and sales and delivery processes (Fliess & Lexutt,

2016).

Another aspect often discussed in this stream of servitization literature is the importance of

organizational competencies and capabilities, and how they have to be developed and

changed for successful servitization (Oliva & Kallenberg, 2003). The production-related ca-

pabilities of manufacturers are generally considered an asset for servitization (Raja, Bourne,

Goffin, Çakkol & Martinez, 2013). As the company advances to offering more advanced ser-

vices, more and different capabilities need to be developed (Salonen, 2011) or obtained

through partnerships (Davies, Brady & Hobday, 2006). Also this is discussed in greater detail

in Chapter 2 (Fliess & Lexutt, 2019, p. 67 ff.).

The dominant characteristic of the product-service systems (PSS) community is the focus on

environmental sustainability (Lightfoot et al., 2013). A PSS is defined as “a system of prod-

ucts, services, networks of actors and supporting infrastructure that continuously strives to be

competitive, satisfy customer needs and have a lower environmental impact than traditional

business models” (Mont, 2002, p. 239). It can be considered as a special form of service

offering, positioned on the right-end of the product-service continuum (Fliess & Lexutt, 2019),

concentrating on selling functionality instead of asset ownership.

A large proportion of PSS research examines the impact of PSS on the environment, policy

implications and the societal impact of sustainable production and consumption (Rabetino et

al., 2018; Tukker, 2004; Mont, 2002). Another PSS research stream focuses on PSS design

and development and is closely connected to the service science and engineering communi-

ty (Rabetino et al., 2018).

Similarly to the services marketing perspective, the product-service systems community

views servitization as a reorientation of the provider’s value proposition. Instead of selling a

product, product-service systems provide the customer with product benefits (functionality,

utility, self-esteem offered by brand) without necessarily providing ownership of the product

(Dimanche & Roche, 2013). As availability- or performance-based contracts and demateriali-

zation are important themes in PSS-research, the immateriality of the service offering and

the shift from ownership to non-ownership are often discussed in this context (Rabetino et

al., 2018). Non-ownership does not only shift the boundaries between provider and customer

organization (Ehret & Wirtz, 2010), but also requires a change in the attitude and behavior of

the customers, who are often emotionally attached to owning physical products (Neely,

2008).

12

Increased environmental sustainability through the reduction of material flows and emission

is one of the main purposes of offering PSS (Tukker, 2004). Consequently, transitioning from

offering products to offering PSS also entails a strategic refocus on environmental sustaina-

bility (Tukker, 2004).

Finally, the service science and engineering community is rooted in Information Systems and

Information Technology research (Rabetino et al., 2018). Strongly influenced by the service-

dominant logic, it focuses on the co-creation of value in complex service systems (Spohrer,

Maglio, Bailey & Gruhl, 2007; Vargo, Maglio & Akaka, 2008). In this research stream, service

is viewed as a system of interacting parts including people, technology and business

(Chesbrough & Spohrer, 2006). Drawing on disciplines such as computer science, engineer-

ing, cognitive science and economics, this field studies how service systems or PSS should

be configured and designed, and how they can evolve for better service innovation and quali-

ty (Rabetino et al., 2018).

The service science and engineering community examines changes in the design and devel-

opment of services (Lightfoot et al., 2013). Integrated product- and service-development,

supported by information- and communication technologies is a required change for serviti-

zation (Pan & Nguyen, 2015; Fischer et al., 2010). Designing and developing new advanced

services and solutions that support the customers’ business goals and practices is consid-

ered particularly challenging (Martin & Horne, 1992; Brax, 2005). The service science and

engineering approach examines how engineering and computer aided tools can be used for

co-designing product-service systems, and analyzes technical requirements and engineering

methods applied during the integrated design, planning, production and delivery processes of

PSS (Rabetino et al., 2018).

The previous discussion showed that servitization entails much more than just adding ser-

vices to the product offering (Brax, 2005). Different elements as well as the business logic of

an organization are influenced by servitization. This is captured by the business model ap-

proach, which provides an alternative, more holistic conceptualization of servitization induced

organizational changes.

While there are numerous conceptualizations of business models and their elements (e.g.

Chesbrough & Rosenblom, 2002; Zott & Amit, 2007), Osterwalder & Pigneur (2010) provide

the most comprehensive framework. A business model generally shows how an organization

creates value, and consists of 9 key elements: key partners, key activities, key resources,

cost structure, value proposition, customer relationships, channels, revenue streams and

customer segments (Osterwalder & Pigneur, 2010). As these elements are interconnected, a

13

change in one of them results in a ripple of change in the other elements as well (Osterwal-

der & Pigneur, 2010).

The introduction of new services often implies changes in these elements (Gremyr, Löfberg

& Witell, 2010). The degree of change varies from incremental to radical innovation, depend-

ing on which business model elements are most heavily affected by the transition to services

(Witell & Löfgren, 2013). Particularly at more advanced stages, when the relative importance

of services exceeds that of the products, servitization has profound effects on most of the

firm’s business model elements (Storbacka, 2011). Consequently, servitization can be

framed as a business model innovation, where business model innovation is defined as “a

process that deliberately changes the core elements of a firm and its business logic”

(Bucherer, Eisert & Gassmann, 2012, p. 184).

Business model innovation usually focuses on changing from one business model to anoth-

er. With servitization, however, multiple service offerings and business models coexist in one

organization (Kowalkowski, Gebauer & Oliva, 2017). Manufacturers rarely abandon their tra-

ditional product business when advancing along the product-service continuum (Storbacka et

al. 2013, Salonen, Saglam & Hacklin, 2017). Furthermore, the transition is not necessarily

linear, but can include backwards movement and deservitization (Kowalkowski, Gebauer &

Oliva, 2017).

This is why not only the content, i.e. the affected elements of the business model, but also

the context and the process of servitization are important (Bigdeli, Baines, Bustinza & Shi,

2017). Research examining service transition trajectories focuses on the evolutionary steps a

company undertakes in the servitization process (e.g. Oliva & Kallenberg, 2003; Matthyssens

& Vandenbempt, 2010; Brax & Visintin, 2017; see also Chapter 2 (Fliess & Lexutt, 2019, p.

60 ff.)). Some recent studies also adopt a change management perspective to servitization,

concluding that servitization is a complex organizational change process (Brax & Visintin,

2017). It often follows a rather emergent and intuitive path and results in the co-existence of

different types of service and their corresponding business models (Martinez, Neely, Velu,

Leinster-Evans & Bisessar, 2017). It affects individuals, teams, units, and the organization as

a whole (Lenka, Parida, Rönnberg Sjödin & Wincent, 2018). Especially at more advanced

stages of servitization, when the company is offering access- or performance based con-

tracts, servitization requires an institutional change (Spring & Araujo, 2017).

To conclude the reasoning of this discussion, in the context of this dissertation servitization is

understood as a complex organizational transformation. It is defined as “the transformational

process of shifting from a product-centric business model and logic to a service-centric ap-

proach” (Kowalkowski, Gebauer, Kamp & Parry, 2017, p. 8).

14

Such organizational transformation comes with innumerable complexities and potential for

conflicts (Lenka et al., 2018). This is why it is not easy to carry through with it successfully,

and many servitization endeavors lead to less-than-expected outcomes or even to failure

(Gebauer, Fleisch & Freidli, 2005; Valtakoski, 2017). This is discussed in the following chap-

ter.

1.3 Formulating the research question Although promising, servitization does not always yield the expected positive effects on or-

ganizational performance. The drivers of servitization illustrated in Table 1 lead manufactur-

ers to making substantial investments to extend their service offering (Gebauer, Fleisch &

Friedli, 2005). However, sometimes the increased service offering does not generate the

expected corresponding higher returns. This phenomenon is referred to as the service para-

dox (Gebauer, Fleisch & Friedli, 2005; Brax, 2005).

Indeed, many firms struggle to manage their transition to services successfully (Lütjen et al.,

2017). There appears to be a profitability hurdle for services, meaning that a specific scale of

services has to be reached in order for them to lead to higher profitability for the firm (Visnjic

& VanLooy, 2013). Fang et al. (2008) studied the effect of service transition on firm value and

show that the effect becomes positive when service revenue reaches 20-30% of the compa-

ny’s total revenue. If the share of service revenue is below that, offering services might have

a negative impact on firm value (Fang et al., 2008).

In some cases, the service paradox can result in negative outcomes for the organization.

Neely (2008) found a disproportionately large proportion of bankrupt servitized firms in his

sample of 10,028 manufacturing firms from 25 different countries. Servitizing firms face high-

er internal and external risks, which increases their risk of bankruptcy (Benedettini et al.,

2015). Valtakoski (2017) even suggested that servitization failure is not only a possible, but

often also a likely occurrence. However, depending on how the extension of the service offer-

ing is complemented by firm-level contextual factors, it can also decrease bankruptcy likeli-

hood (Benedettini et al., 2017).

Furthermore, while servitization has affected a broad range of manufacturers, the share of

service revenue is still low in European manufacturing businesses (Gebauer, Friedli &

Fleisch, 2006; Lay et al., 2010). The maturity of servitization is also low, as indicated by the

low service turnover and the mostly product-related service offerings (Lay et al., 2010; Dachs

et al., 2014). This also means that the changes mostly affect the tactical and not the strategic

or cultural level of the organization (Fundin et al., 2012).

15

To sum up, some manufacturers achieve to improve their performance by offering services,

while others struggle with the transition and do not achieve the expected positive results, and

sometimes even suffer negative effects. These observations lead to the overarching re-

search question of this dissertation:

Why are some companies successful with their servitization while others fail to achieve the

expected positive outcomes?

In order to answer this question, the first step is to examine which factors have been found to

affect servitization success. This is the purpose of the first article presented in Chapter 2

(Fliess & Lexutt, 2019).

So far, there is no consensus in the literature regarding the critical success- and failure fac-

tors for servitization. The ambiguity begins with the conceptualization of servitization suc-

cess. It is not always clear in current research when a service transition can really be consid-

ered successful. Most research is qualitative and focuses on successful cases of servitization

(Fliess & Lexutt, 2019), while research about unsuccessful cases remains sparse (Valtako-

ski, 2017). Often, it is not made explicit if and how the impact of servitization on the firm’s

performance is captured. The few quantitative studies that do use specific performance crite-

ria use a multitude of outcomes. This is discussed in greater detail in Chapters 2 (Fliess &

Lexutt, 2019, p. 62), 3 (Lexutt, 2019a, Article in press) and 4 (Lexutt, 2019b, p.5). In the con-

text of this dissertation, servitization is considered successful if it results in a positive effect

on the financial as well as the non-financial performance of the firm (see Chapter 3 (Lexutt,

2019a, Article in press)).

Several approaches are used in the literature to explain why some companies are successful

with their servitization while others fail. One explanation is that the organizational transfor-

mation discussed in the previous chapter is associated with various challenges and pitfalls.

From this perspective, servitization success depends on how well the organization deals with

the respective challenges.

Each category of change comes with specific challenges, as also discussed in Chapter 2

(Fliess & Lexutt, 2019, p. 62 ff.). Overall, organizational change is considered to be suscepti-

ble to failure (Mantere, Schildt & Silince, 2012). Since servitization entails a substantial

change that affects the organization’s strategy, culture, business logic, and identity (Probst &

Raisch, 2005), it is often met with considerable internal resistance (Lenka et al, 2018). Indi-

viduals resist organizational change particularly when their collective ways of thinking and

doing are threatened (Nag, Corley & Gioia, 2007), as is the case with a transition from prod-

uct- to service-orientation. In addition, managers might not support the transition to services,

because they do not believe in the financial potential of services or in the firm’s competen-

16

cies for providing services successfully (Gebauer, Fleisch & Friedli, 2005; Oliva & Kallen-

berg, 2003). They might also not be willing to take the risks associated with a strategic

change (Gebauer & Fleisch, 2007).

In terms of theoretical explanations, the most widespread are the resource-based view and

the capabilities-view, including the dynamic capabilities approach (Wang, Lai & Shou, 2018;

Rabetino et al., 2018). According to the resource-based view, resources, skills and compe-

tencies form the basis of a company’s competitive advantage (Peteraf, 1993). The most

straightforward application of the resource-based view to servitization is that the investment

in services requires financial, human and organizational resources (Visnjic & VanLooy, 2013;

Benedettini et al., 2015; Williams, Ashill & Naumann, 2017). In this respect, Fang et al.

(2008) showed that resource slack positively moderates the effect of the service offering on

firm value. From this perspective, servitization success depends on the availability of the

required resources.

However, this explanation might be overly simplistic. Indeed, research has shown that a

healthy financial position, which indicates an abundance of financial resources, is not neces-

sary for servitization success (Böhm, Eggert & Thiesbrummel, 2017). Furthermore, both

small – i.e. organizations with a usually more restricted resource situation – and large organ-

izations can yield positive results from servitization (Dachs et al., 2014). Ultimately, it is not

the availability of resources, per se, that create competitive advantage, but how management

combines and leverages unique combinations of these resources to build distinctive capabili-

ties that are embedded in a firm’s routines and processes (Sirmon, Hitt, Ireland & Gilbert,

2011). This approach is also prevalent in servitization research, where numerous critical re-

sources and capabilities for servitization success are identified (e.g. Davies et al., 2006;

Ulaga & Reinartz, 2011; Coreynen, Matthyssens & Van Bockhaven, 2017; see also Chapter

2 (Fliess & Lexutt, 2019, p. 67 ff.)).

The resource-based and capabilities-based views have been criticized for being too static

and ignoring the necessity of an organization to adapt to developments in its environment

(Teece, 2007). This aspect is considered in the dynamic capabilities approach, which states

that a firm’s competitive advantage depends on a firm’s capabilities to adapt, integrate and

reconfigure skills, resources and functional competencies in a dynamic environment (Teece,

2007). In the context of servitization, dynamic capabilities have a twofold role: first, existing

service-specific dynamic capabilities are a source of competitive advantage and can there-

fore lead to servitization success; and second, specific dynamic capabilities need to be de-

veloped in order to overcome challenges and achieve servitization success (Eloranta &

Turunen, 2015).

17

While the dynamic capabilities approach recognizes the importance of environmental chang-

es, none of the aforementioned explanations explicitly considers the role of contextual factors

in understanding servitization success. Contingency theory focuses on the performance ef-

fects of “fit”, defined as the matching of two or more organizational factors of concern in a

specific context (Donaldson, 2001). While originally focusing on environment-structure rela-

tionships, contingency theory is applied to numerous combinations of organizational ele-

ments (Sirmon & Hitt, 2009; Williams et al., 2017). It has been used to explain organizational

success in general (e.g. Sirmon & Hitt, 2009), and servitization success in particular (e.g.

Gebauer, Edvardsson, Gustafsson & Witell, 2010). In the context of servitization, fit between

strategy and environment (Neu & Brown, 2005; Gebauer, 2008) and strategy and structure

(Gebauer, Edvardsson, Gustafsson & Witell, 2010) have been found to impact performance.

From this perspective, servitization success does not depend on specific success factors, per

se, but on finding the right combination of factors suitable for a specific context.

As the previous discussion showed, there are numerous alternative explanations for serviti-

zation success, leading to a plethora of potential success factors. The predominance of

qualitative research has resulted in rich, but fragmented and not easily generalizable find-

ings. Furthermore, the existence of different theoretical backgrounds and multiple research

streams leads to an inconsistent use of terminology (Brax & Visintin, 2017). Consequently,

there is a need for a comprehensive framework summarizing and categorizing existing re-

search on servitization success factors. This is the aim of the first article (Fliess & Lexutt,

2019) presented in Chapter 2.

After examining the state-of-the-art on servitization success, the next step for answering the

research question is to empirically examine the impact of (some of) the identified success

factors on the outcome of interest. However, empirical research on organizational success

presents certain conceptual and methodological challenges that need to be considered. This

is addressed in the following chapter.

18

1.4 Conceptual and methodological considerations for success factor research

Success factor research is a central research stream in management research (Homburg &

Krohmer, 2004). Originating in strategic management in the 1960s (Nicolai & Kieser, 2002),

success factor research has successfully disseminated into other areas, such as organiza-

tion theory and marketing (Bauer & Sauer, 2004). Generally speaking, success factor re-

search appears to follow a certain trajectory, starting with the exploratory, case-study based

identification of success factors in individual cases, followed by the specification of these

factors for specific company or industry types (Nicolai & Kieser, 2002). The assumed cause-

and-effect relationship is then examined quantitatively, mostly using econometric or multivar-

iate statistical models (Nicolai & Kieser, 2002). Functional relationships between success as

a dependent variable and a varying number of independent variables are postulated and

tested, often using average practice functions such as regressions (Nicolai & Kieser, 2002).

In the next phase, variations in the dependent and independent variables are introduced,

using different conceptualizations and operationalizations of performance and increasing the

number of independent variables (Nicolai & Kieser, 2002). Then, context variables or media-

tor variables are introduced to further refine the findings (Nicolai & Kieser, 2002). Finally,

when a large amount of findings makes specific conclusions difficult, meta-analyses are per-

formed (Nicolai & Kieser, 2002).

This trajectory can also be observed in servitization research, although not as clear-cut as

suggested by Nicolai & Kieser (2002). Exploratory, qualitative and case-study based re-

search still dominates the field (Fliess & Lexutt, 2019), while at the same time the first meta-

analysis was published in 2018 (Wang et al., 2018). This dissertation does not neatly fall

anywhere on this trajectory, as it adopts a conceptually and methodologically alternative ap-

proach (see Figure 2). It could however be positioned on a “parallel street” at the same

height as the examination of moderators and mediators through multivariate statistical mod-

els.

While this iterative process of refining a research field is not uncommon (Bauer & Sauer,

2004), success factor research has received some harsh criticism due to the often inconclu-

sive and sometimes even contradictory results it has produced (March & Sutton, 1997; Nico-

lai & Kieser, 2002; Kieser & Nicolai, 2005). Critics have gone as far as to suggest completely

abandoning the search for independent factors that impact on organizational performance

(March & Sutton, 1997; Nicolai & Kieser, 2002; Kieser & Nicolai, 2005). However, the critics

of success factor research have received their fair share of criticism as well (Fritz, 2004;

Bauer & Sauer, 2004; Homburg & Krohmer, 2004). For example, it has been argued that the

critics use straw-man arguments (Homburg & Krohmer, 2004), cherry-pick their references

19

(Homburg & Krohmer, 2004), use methodological issues that are true for the entirety of em-

pirical social research to specifically discredit success factor research (Bauer & Sauer,

2004), and take a radical constructivist stance (Fritz, 2004). Radical constructivism posits

that cognition is completely subjective and dependent on individuals’ interpretations of expe-

riences, meaning that it does not concur with actual, objective “reality” (von Glaserfeld,

1997). In contrast, most success factor research, including this thesis, takes a realist stance

(Fritz, 2004), assuming that the external world exists unperceived (Hunt, 1990) and objective

conclusions about “reality” can be drawn, because “features of the world external to the theo-

ry influence a theory’s successful and unsuccessful explanations, predictions, and interven-

tions” (Hunt, 2015, p. 22). The conclusion that the entire research field is pointless is there-

fore exaggerated (Homburg & Krohmer, 2004). Traditional success factor research does,

however, present some substantial problems, which are discussed below.

Researchers who study organizational performance face two, sometimes contradictory, de-

mands from the practitioner and the scholarly communities (March & Sutton, 1997; Kieser &

Nicolai, 2005). The first community is primarily focused on relevance and demands and re-

wards suggestions for improving organizational performance. The second, with a primary

focus on rigor, demands and rewards sophisticated and rigorous analyses (March & Sutton,

1997; Kieser & Nicolai, 2005). While relevance and rigor are not mutually exclusive (Pater-

son, Harms & Tuggle, 2018), findings of performance analyses are often contradictory, limit-

ing their potential to create actionable knowledge (Kieser & Nicolai, 2005).

It has been argued that the reason for this is that many studies of organizational performance

do not capture the true causal relations between performance variables and the independent

variables that are found to correlate with them through the data and methods applied (March

& Sutton, 1997). Methodological issues prevalent in statistics-based empirical social re-

search make it difficult to draw causal inferences (March & Sutton, 1997; Homburg &

Krohmer, 2004). For example, independent variables might be influenced by unobserved

variables, a phenomenon called endogeneity (Nicolai & Kieser, 2002). Present performance

might be influenced by decisions taken in the past or by previous performance (March & Sut-

ton, 1997), while the long-term impact of the same decision on performance might differ from

company to company (Nicolai & Kieser, 2002). Using data based on retrospective recall of

key informants is considered particularly susceptible to bias, as respondents are likely to

reconstruct the past to make it consistent with current performance and to tell a coherent

story (March & Sutton, 1997). Another issue is survivor bias, as usually only companies that

still exist are included in the analysis (Nicolai & Kieser, 2002).

20

Another issue of traditional success factor research is that it does not adequately consider

the ways in which performance advantage is competitively unstable (March & Sutton, 1997).

Recipes for success disseminate through time, making it more and more difficult for organi-

zations to achieve a competitive advantage with the same recipe (March & Sutton, 1997).

Furthermore, traditional success factor research uses analyses based on average net-effects

(Nicolai & Kieser, 2002). However, it has been shown that superior performance is usually

achieved by doing things differently (Porter, 1998). Using average values to explain above

average performance is therefore deemed inappropriate (Starbuck, 1993).

Ultimately, the critics of success factor research conclude that organizational performance is

far too context-dependent, reality is far too complex, and the search for isolated success fac-

tors is thus futile (March & Sutton, 1997; Nicolai & Kieser, 2002; Kieser & Nicolai, 2005). In

other words, traditional success factor research is problemtatic, because the underlying

causal mechanisms leading to superior performance are not simple and linear, but complex

and non-linear (Fiss, 2011).

As a response to these criticisms and to address the complex causality of organizational per-

formance, a configurational approach to studying organizational performance has been sug-

gested (Zaefarian, Naudé & Henneberg 2010). The notion of fit between different organiza-

tional characteristics to achieve performance is central to the configurational approach, stat-

ing it is not the presence or the degree of certain conditions that is important, but how they

are aligned in a given context (Venkatraman, 1989). Also servitization research has posited

that configurational fit between strategy and structure (Gebauer, Edvardsson, Gustafsson &

Witell, 2010), strategy and environment (Neu & Brown, 2005), elements of the business

model (Storbacka, 2011), critical resources and capabilities (Ulaga & Reinartz, 2011) or dy-

namic capabilities (Fischer et al., 2010) is essential for servitization success. However, these

studies do not explicitly follow a configurational approach and therefore do not consider the

corresponding conceptual and methodological implications. Figure 2 visualizes the concep-

tual argumentation followed in this dissertation.

Generally, the configurational approach can be considered as an extension of the contingen-

cy approach (Harms, Kraus & Schwartz, 2009). Contingency theory conceptualizes success

as a function of contextual conditions (Ketchen, Thomas & Snow, 1993), suggesting that the

relationship between independent and dependent variable depends on, or is contingent up-

on, a third variable (Donaldson; 2001, Gilbert & Heinecke, 2014). This means that it is limited

to the relationship between two constructs and their impact on performance, not solving the

aforementioned issues of traditional success factor research. A configuration, on the other

hand, “contains relationships among elements or items representing multiple domains”

21

(Dess, Newport & Rasheed, 1993, p. 776). This means that more than two domains can be

analyzed simultaneously, thus drawing more detailed models than possible with the contin-

gency approach (Harms, Kraus & Schwartz, 2009). While traditionally examining configura-

tions of strategy, structure, environment and leadership (Miller, 1987), the configurational

approach can also be applied to study configurations of other characteristics, such as re-

source or capability configurations (Rönnberg Sjödin, Parida & Kohtamäki, 2016).

Figure 2: Conceptual framework of articles 2 and 3

Furthermore, in contingency theory the underlying relationships are assumed to be unidirec-

tional and linear (Longenecker & Pringle, 1978; Meyer, Tsui & Hining, 1993; Harms, Kraus &

Schwarz, 2009). However, empirical evidence suggests that much of organizational reality

cannot be examined through linear causal models (Pennings, 1987). In contrast, the configu-

rational approach explicitly addresses nonlinearity (Meyer, Tsui & Hining, 1993), since “con-

figurations are inherently multidimensional entities in which key attributes are tightly interre-

lated and mutually reinforcing” (Dess, Newport & Rasheed 1993, p. 784).

Consequently, the configurational approach addresses the aforementioned criticism regard-

ing the causal complexity of organizational success (March & Sutton, 1997). It specifically

assumes complex causality and addresses the underlying principles of equifinality, conjunc-

tural causation and asymmetric causation (Fiss, 2007; Ordanini, Parasuraman & Rubera,

22

2014), as also discussed in Chapters 3 (Lexutt, 2019a, Article in press) and 4 (Lexutt, 2019b,

p.7 ff).

The concept of equifinality means that in open systems, such as biological and social sys-

tems, different initial conditions can lead to similar outcomes (Bertalanffy, 1968). Applied to

organizational performance in general this means that there are many ways for an organiza-

tion to be successful. Consequently, the failure of traditional success factor research to reach

conclusive results (Nicolai & Kieser, 2002) is not indicative of a “useless” research stream,

but of equifinality. Also in the context of servitization several equifinal paths can lead to suc-

cess (Böhm et al., 2017; Forkmann, Henneberg, Witell & Kindström, 2017; Ambroise, Prim-

Allaza & Teyssier, 2018). Equifinality does not mean arbitrariness, however. Reductive

mechanisms, such as economic, institutional and technical forces, limit the number of poten-

tial successful configurations (Wolf, 2000). Grounded in the assumption that social life is or-

derly but complex, the purpose of configuration research is the identification of these discrete

and relatively homogeneous configurations (Meyer, Tsui & Hinings, 1993).

Conjunctural causation means that a causal condition might not have an effect on the out-

come on its own, but only in combination with other causal conditions, and that it might even

have opposing effects when combined with different factors (Schneider & Wagemann, 2012).

Consequently, the impact of one organizational factor may depend on the presence or ab-

sence of another factor (Jackson & Ni, 2013), and factors that are causally related in one

configuration may be unrelated or even inversely related in another (Meyer, Tsui & Hinings,

1993). Conjunctural causation is presumably one underlying reason for the sometimes con-

tradictory findings of traditional success factor research. Also several identified servitization

success factors have been found to have different effects on success, depending on how

they are combined with each other or with other factors (e.g. Gebauer & Pütz, 2009; Gebau-

er, Edvardsson & Bjurko, 2010, see Table 1 in Chapter 3 (Lexutt, 2019a, Article in press)),

indicating conjunctural causation.

Asymmetric causation means that different combinations of causal conditions explain the

presence and the absence of an outcome (Schneider & Wagemann, 2012). In other words,

models that predict high scores for the dependent variable are not the mirror opposites of

models that predict low scores (Woodside, 2015). Viewing failure as a mirror image of suc-

cess does not contribute significantly to understanding the different causal mechanisms lead-

ing to success and failure (Van Rooij, 2015). This is why configuration research examines

both the occurrence as well as the non-occurrence of the outcome of interest (Schneider &

Wagemann, 2012), meaning that both successful as well as unsuccessful cases are exam-

ined. While not perfectly alleviating survivor bias, it still paints a more nuanced and realistic

23

picture than traditional success factor research. For servitization, that means that different

configurations lead to success and to failure. While little research exists on unsuccessful

servitization, the factors that are studied to examine servitization failure, like costs and risks

(Neely, 2008; Benedettini et al., 2015; Benedettini et al., 2017) differ from the factors com-

monly assumed to lead to success.

Finally, complex causality also implies differentiating between relationships of necessity and

sufficiency (Ragin, 2008). Necessity means that an outcome cannot be achieved without the

condition, while sufficiency means that whenever the condition is observed, the outcome is

also observed (Schneider & Wagemann, 2012). This differentiation has the potential to miti-

gate the problems regarding the nature of competitive advantage in traditional success factor

research (Nicolai & Kieser, 2002). Necessary conditions constitute requirements, without

which superior performance is not achieved, but their presence is not enough to lead to suc-

cess. These conditions are presumably quickly disseminated through competition and rela-

tively easily copied. Consequently, on their own, they do not constitute “success factors” that

lead to a competitive advantage. Sufficient conditions, on the other hand, consistently lead to

superior performance and could be labeled “success factors”. However, configurational re-

search rarely results in the identification of individual sufficient conditions (Schneider &

Wagemann, 2012). Rather, several, equifinal sufficient configurations of conditions are identi-

fied (Schneider & Wagemann, 2012). Each configuration constitutes a different way to

achieve competitive advantage. As there is more than one ideal way, with some paths more

common than others, some paths more suitable for specific contexts than others, the quick

dissemination and imitation of all of these recipes for success is less likely.

To sum up, in the context of this dissertation, servitization success is conceptualized as a

causally complex phenomenon which is best understood from a configurational perspective.

This leads to a refinement of the overarching research question, as the research question

guiding papers 2 and 3 is:

Which configurations of success factors lead to the occurrence and non-occurrence of ser-

vitization success?

By identifying equifinal configurations that lead to success and different configurations that

lead to a lack thereof, the empirical research of this dissertation uncovers causal relations

that explain why some organizations are successful with their servitization and others fail.

As discussed above, many problems of success factor research stem from the limitations of

traditional statistical methods (March & Sutton, 1997; Nicolai & Kieser, 2002). As discussed

in detail in Chapters 3 (Lexutt, 2019a, Article in press) and 4 (Lexutt, 2019b, p. 7 ff.), tradi-

tional statistical methods are simply not suitable to capture all aspects of complex causality

24

(see Table 2). Correlational net-effects approaches focus on the relative importance of com-

peting variables in explaining outcome variation (Fiss, 2007), making it difficult to capture the

configurational nature of cases which is assumed in configuration research, so that these

methods are limited in capturing complex causality (Frösén, Luoma, Jaakkola, Tikkanen &

Aspara, 2016; Tóth, Henneberg & Naudé, 2017). Regression analysis models how the typical

(mostly average) value of the dependent variable “performance” changes, when any one of

the independent success factors varies (Backhaus et al., 2018). It is widely used particularly

in earlier success factor research (Nicolai & Kieser, 2002) even though it has severe limita-

tions in its ability to infer causal relationships and to adequately explain superior performance

(Starbuck, 1993; Frösén et al., 2016). Furthermore, it does not account for any of the charac-

teristics of complex causality (Forster & Weiber, 2015; Frösén et al., 2016).

Methodology Aspects of com-plex causality

Regression Structural equation mod-eling

Cluster analsysis

QCA

Equifinality No Yes Yes Yes

Conjunctural causation

No Yes Yes Yes

Asymmetric causation

No No No Yes

Necessity ≠ suf-ficiency

No No No Yes

Table 2: Methodology and complex causality

More recently, structural equation modeling has become more popular in success factor re-

search (Albers & Hildebrandt, 2006; Klarmann, 2008). It is methodologically more advanced

than regression analysis and allows the modeling of causal paths (Backhaus et al., 2015).

The effects of mediating and moderating variables can be captured (Backhaus et al., 2015),

meaning that causal interactions and equifinality are accounted for to a certain degree (Frö-

sén et al., 2016).

Cluster analysis has also been suggested for configurational research (Miller, 1981). Cluster

analysis can be used to identify distinct groups of firms that share similar characteristics and

to predict their performance (Miller, 1981).

However, neither structural equation modeling nor cluster analysis differentiate between

conditions that are necessary or sufficient for superior performance (Fiss, 2007; Frösén et

al., 2016). Rather, they imply that the identified solutions are at the same time necessary and

25

sufficient (Frösén et al. 2016; Dess et al., 1993). Furthermore, neither of these methods can

account for causal asymmetry, as it is assumed that the identified solutions explain the pres-

ence as well as the absence of the outcome in the same way (Frösén et al., 2016; Dess et

al., 1993).

Most current quantitative research however still uses net-effects statistical methods to ana-

lyze organizational performance, which leads to a discrepancy between conceptual argu-

mentation and applied methodology (Woodside, 2015). Also most of the current servitization

research does not account for causal complexity. It is either qualitative, case-study based, or

adopts statistical, net-effects approaches (Fliess & Lexutt, 2019).

As a solution, it is suggested that the causal relations of complex, configurational phenome-

na like organizational performance can be captured and understood more effectively in terms

of set-theoretic relations rather than correlations or covariance (Fiss, 2011). Consequently,

the adoption of set-theoretic methodology is recommended for configurational research (e.g.

Fiss, 2007; Fiss, 2011; Zaefarian, Thiesbrummel, Henneberg & Naudé, 2017). Qualitative

comparative analysis (QCA) is the most developed and most widely applied set-theoretic

method (Ragin, 2008; Schneider & Wagemann, 2012; Kan, Adegbite, El Omari & Abdellatif,

2016). Following this recommendation, fuzzy set qualitative comparative analysis (fsQCA) is

used for the empirical analysis in this dissertation. It is explained in detail in Chapters 3 (Lex-

utt, 2019a, Article in press) and 4 (Lexutt, 2019b, p. 7 ff.).

State-of-the art applications of QCA in general and fsQCA in particular are sparse in serviti-

zation. At the time of writing this dissertation, only 3 studies have adopted fsQCA to explain

servitization success (Böhm et al., 2017; Forkmann, Henneberg et al., 2017; Ambroise et al.,

2018). Böhm et al. (2017) use panel data from the German manufacturing industry to exam-

ine whether a healthy financial situation is a necessary condition for revenue growth. They do

not identify any necessary condition for their outcome, but find that, depending on the finan-

cial situation, different configurations of the conditions service emphasis, company size, and

relationships with customers and suppliers, are sufficient for revenue growth. Forkmann,

Henneberg et al. (2017) adopt a dyadic approach. They study which configurations of service

offering, service pricing, service capabilities and the servitization process affect servitization

success and failure in terms of mutual value creation, based on qualitative data from Scandi-

navian manufacturing firms. Finally, Ambroise et al. (2018) apply fsQCA to complement the

findings of a structural equation model regarding the effects of different combinations of ser-

vitization strategies and customer oriented organizational design dimensions on the overall

profitability of French Small- and Medium-sized Enterprises.

26

Consequently, neither of these studies examines the same conditions analysed in Chapters

3 and 4 of the present thesis. They furthermore use different conceptualizations of servitiza-

tion success and only examine one performance-related outcome, specifically overall reve-

nue growth (Böhm et al., 2017), mutual value creation (Forkmann, Henneberg et al., 2017)

and overall profitability (Ambroise et al., 2018). In contrast, the present thesis uses a more

complex conceptualization of servitization success and examines differential effects on fi-

nancial-, non-financial and overall performance, as explained in detail in Chapters 3 (Lexutt,

2019a, Article in press) and 4 (Lexutt, 2019b, p. 5).

While these studies constitute important contributions, they have certain methodological

shortcomings. Therefore, the full potential of fsQCA has not been utilized yet, as indicated by

the omission of reporting results on necessity (Forkmann, Henneberg et al., 2017) and on the

absence of the outcome (Böhm et al., 2017; Ambroise et al., 2018). However, conducting the

analysis of necessity as well as analyzing both the presence and the absence of the outcome

are standards of good practice for a state-of-the-art QCA (Schneider & Wagemann, 2010;

Greckhamer et al., 2018). There also appears to be some conceptual ambiguity regarding

the underlying logic of set theoretic methodology, as indicated by the interpretation of fsQCA

as a variable-based method by Ambroise et al. (2018). Also the implications of logical con-

tradictions and skewed set memberships have been largely overlooked, as indicated by the

lack of applying the enhanced standard analysis (Schneider & Wagemann, 2012) and of re-

porting the distribution of the cases (Schneider & Wagemann, 2010).

In contrast, the empirical studies presented in this dissertation constitute state-of-the-art

fsQCA, adhering to the standards of good practice for QCA, in terms of rigor as well as in

terms of reporting (Schneider & Wagemann, 2010; Greckhamer et al., 2018). Analyses of

necessity as well as analyses of sufficiency are performed, separately, for the presence as

well as for the absence of the outcomes. Special attention is given to the distribution of cas-

es, skewed set memberships and the avoidance of logical contradictions. Not only the results

and their parameters of fit are fully reported, but also the respective truth tables and XY-

plots. Finally, the calibration of set membership scores as well as the treatment of logical

remainders is made transparent (see Table 5 and Appendix B in Lexutt, 2019a, Article in

Press; and Table 2, p. 19 and Appendix 1, p. 31 in Lexutt, 2019b).

27

1.5 The structure of this dissertation The three articles that constitute the main body of this dissertation and are presented in

Chapters 2, 3 and 4, aim to provide answers to the question why some manufacturers are

successful with servitization while others fail.

The first article, titled “How to be successful with servitization – guidelines for research and

management” presents the results of a comprehensive, systematic literature review, analyz-

ing 265 contributions from the servitization (i.e. services marketing and operations manage-

ment) and product service systems literature. It provides an overview of the state-of-the art of

servitization research, discussing definitions and conceptualizations of servitization and the

understanding of servitization success. It identifies and categorizes the critical factors that

affect the success of manufacturers’ servitization endeavors within a comprehensive frame-

work. Overall, company-, customer-, and environment-related factors are found to impact

servitization success. The findings are summarized in 17 testable propositions regarding the

effect of several of the identified factors on servitization success. The differing importance of

the various factors, depending on the maturity of the servitization strategy is also considered

in the discussion. Ultimately, the framework and the propositions consolidate the knowledge

in the servitization field, serving as a guide for future research and as support for informed

management decision making.

The second (Chapter 3) and the third (Chapter 4) article empirically test configurations of

some of the identified success factors. The two articles focus on different aspects of the re-

search question, i.e. the second article focuses on explaining successful servitization and the

third on explaining the service paradox. They do however use the same methodology.

As discussed in the previous chapter, the large number of identified success factors in the

first article and the interconnected, inconclusive and sometimes contradictory results of pre-

vious research lead to the conclusion that servitization success is a causally complex phe-

nomenon and is therefore understood best from a configurational perspective. Consequently,

fsQCA is applied to appropriately address the complex causality of servitization success.

Before applying fsQCA in articles 2 and 3, the suitability of the used items to capture the in-

tended constructs was tested with a confirmatory factor analysis. For paper 2 AMOS 25 was

used. For greater efficiency, as the QCA is also conducted in R, the lavaan0.6-2 packages in

R were used for the confirmatory factor analysis in the third paper. Consequently, three dis-

tinct methodologies are applied in this dissertation: systematic literature analysis for paper 1,

and confirmatory factor analysis and fuzzy set qualitative comparative analysis for papers 2

and 3.

28

Due to their large number, it is not possible to examine all identified success factors from

article 1 in one model. Therefore, articles 2 and 3 focus on a selection of company related

success factors. In line with the conceptualization of servitization as organizational transfor-

mation, this dissertation adopts a strategic choice perspective, meaning that managerial de-

cisions about how an organization responds to its context and environment are considered to

determine organizational performance (Ketchen, Thomas & Snow, 1993). Consequently,

conditions that are under managerial control are chosen for the configurational models. In

line with traditional configuration research and the operations management literature on ser-

vitization, conditions from the domains of strategy, structure, culture and leadership are cho-

sen. Overall, it is found that what makes the difference between successful and unsuccessful

servitization is the configurational fit of the examined success factors.

More specifically, the second article (Chapter 3), titled “Different roads to servitization suc-

cess – a configurational analysis of financial and non-financial service performance” disen-

tangles the complex relationships between focus of the service offering on services support-

ing the product (SSP) and services supporting the clients actions (SSC), the existence of a

separate service organization, decentralization of decision making, management commit-

ment to services, service orientation of corporate culture, and financial, non-financial, and

overall service success. A service-oriented corporate culture, decentralized decision making,

and management commitment to services are identified as necessary for servitization suc-

cess. Three sufficient configurations for servitization success and three sufficient configura-

tions for a lack thereof are identified, compared and discussed. These findings paint a more

realistic and multifaceted image of the causal relationships underlying servitization success,

thus yielding useful suggestions for the management of servitizing businesses.

While both articles 2 and 3 address asymmetric causality and examine both the presence as

well as the absence of the outcomes of interest, the second article focuses more on explain-

ing servitization success. The third article focuses more explicitly on asymmetric causality

and on explaining the service paradox and the absence of financial servitization success.

Specifically, the third article (Chapter 4), titled “Overcoming the service paradox – a configu-

rational analysis” examines the causal factors responsible for the service paradox by analyz-

ing and comparing both the occurrence of service profitability and overall profit growth, as

well as their absence. Elements of service strategy (focus of the offering on product – or pro-

cess-oriented services, existence of a clearly formulated service strategy) and structure (ex-

istence of a separate service organization, service orientation of corporate culture) are in-

cluded in the configurational model. The existence of a clearly formulated service strategy

and a strong service orientation of corporate culture are identified as necessary conditions

29

for service profitability. Five configurations sufficient for service profitability and overall profit

growth are identified, as well as three configurations sufficient for the absence of the out-

comes. The discussion results in the formulation of four propositions and three ideal-type

configurations for overcoming the service paradox, focusing on a match between the kind of

service offering and the structure of the service organization. This study therefore adds to the

sparse literature on servitization failure and the service paradox. It offers a theoretically

sound, fine-grained and realistic understanding of the causes of the service paradox, as well

as on ways to overcome it, which ultimately aids managers of servitizing companies in better

decision making.

Chapter 5 summarizes the results of the dissertation and discusses its contribution as well as

its limitations. The dissertation concludes with suggestions for future research.

30

2. Paper 1: How to be successful with servitization – guidelines for research and management

Chapter 2 of this dissertation consists of the paper Fliess, S. & Lexutt, E. (2019). How to be

successful with servitization – guidelines for research and management. Industrial Marketing

Management, 78, 58-75.

Available online at

https://www.sciencedirect.com/science/article/abs/pii/S0019850117301694

31

3. Paper 2: Different roads to servitization success – a configurational analysis of financial and non-financial service performance

Chapter 3 of this dissertation consists of the paper Lexutt, E. (2019a, Article in Press). Differ-

ent roads to servitization success – A configurational analysis of financial and non-financial

service performance. Industrial Marketing Management (2019).

https://doi.org/10.1016/j.indmarman.2019.06.004

Available online at

https://www.sciencedirect.com/science/article/abs/pii/S0019850118306035?via%3Dihub

32

4. Paper 3: Overcoming the service paradox – a configurational analysis

Chapter 4 of this dissertation consists of the working paper Lexutt, E. (2019b). Overcoming

the service paradox – a configurational analysis. Working Paper. University Library Hagen.

https://doi.org/10.18445/20190617-135002-0

Available online at

https://ub-deposit.fernuni-hagen.de/receive/mir_mods_00001526

33

5. Concluding remarks

5.1 Summary of findings and contribution to research The purpose of this thesis was to advance our understanding of why some manufacturers

achieve superior performance through servitization while others fail to attain positive perfor-

mance effects.

The first step in answering this question was the identification of over 30 potential servitiza-

tion success factors through a systematic literature review of 265 contributions on servitiza-

tion (first article presented in Chapter 2, Fliess & Lexutt, 2019). At publication (available

online since December 2017), this study constituted the most comprehensive systematic

literature review on servitization and the only one that focuses explicitly on the identification

and categorization of servitization success factors.

A holistic framework, containing all the servitization success factors currently discussed in

the literature, is provided. Company-related, customer-related as well as environmental fac-

tors are shown to have an impact on servitization success. The findings are summarized in

17 testable propositions regarding the effect of several of the identified factors on servitiza-

tion success. The differing importance of the various factors, depending on the maturity of

the servitization strategy is also considered in the discussion.

The company-related factors, which are rooted mostly in the operations management re-

search stream, are the most numerous and the most widely researched. The findings of the

first article add to this literature by summarizing and categorizing these factors in a compre-

hensive framework, and by identifying gaps in the literature and future research avenues.

By identifying customer-related and environmental servitization success factors, the first arti-

cle also contributes to the services marketing stream of servitization research. The findings

emphasize the important role of customer co-creation and the competitive environment for

servitization success, while emphasizing their high potential for fruitful future research.

Contrary to most previous literature reviews, the literature review presented in Chapter 2 in-

cludes studies from all major servitization research streams (see Chapter 1.2). It therefore

contributes to the accumulation and dissemination of knowledge within and across the relat-

ed research streams (Rabetino et al., 2018). The ambiguous use of terminology in servitiza-

tion research is discussed and clarifications of the terms service transition, service offering,

transition paths and servitization strategies are proposed. The study is thus a stepping stone

towards a more homogeneous use of terminology which is important for the consolidation of

servitization as an independent research field (Rabetino et al., 2018).

34

While the first article provides a comprehensive overview of the possible explanations for

servitization success, the second and the third article take a closer look into the complex role

of some of the identified factors presented in Chapter 2 (Fliess & Lexutt, 2019, Table 5, p.

64). Adopting a strategic choice perspective (Ketchen et al., 1993), factors that are under the

influence of managerial decisions were chosen for empirical examination in these studies.

This means that they mainly contribute to the mainstream servitization research, belonging to

the operations management community.

Motivated by the findings of the first article, the empirical studies in articles 2 (Lexutt, 2019a,

Article in press) and 3 (Lexutt, 2019b, Working paper), presented in Chapter 3 and 4, respec-

tively, provide insight regarding some of the propositions in article 1.

Most importantly, articles 2 and 3 provide sound conceptual arguments and empirical evi-

dence for the configurational, causally complex nature of servitization success and failure.

They thus support Proposition 17, stating that “it is not the presence or absence of individual

factors, but the right configuration of them that is most critical for successful service transi-

tion” (Fliess & Lexutt, 2019, p. 69).

This is a fairly novel and significant contribution to servitization research. Conceptually, it

expands our understanding of how manufacturers can be successful with servitization, by

identifying several, equifinal paths that have consistently led to superior performance in the

examined cases. Previous research often focuses on finding out whether or not individual

factors, for example the type of service offering (e.g. Antioco et al., 2008) or the way of or-

ganizing the service business (e.g. Oliva et al., 2012) have a direct or indirect effect on ser-

vitization related performance. In contrast, the research presented in this thesis shows that,

depending on how the factors are combined with each other, superior performance can be

achieved with a limited, a product-oriented and an advanced service offering, or with an inte-

grated as well as with a separated service organization. It therefore paints a more nuanced,

detailed and rich picture of the different recipes for success.

The third study identifies the existence of a clearly defined service strategy as a necessary

condition for service profitability (see Lexutt, 2019b, p.10). It therefore provides empirical

evidence for the financial implications of a formulated service strategy, as suggested in

Proposition 1, stating that “companies that integrate services into their corporate strategy are

more successful with their servitization […]” (Fliess & Lexutt, 2019, p.66). This finding con-

tributes to the discussion of planned versus emergent strategies in servitization (Kohtamäki &

Helo, 2015; Kowalkowski et al., 2012), which has not yet received much attention.

Proposition 2 states that “the appropriate organizational structure depends on the maturity of

the servitization process; the more advanced, the more appropriate a separate service or-

35

ganization […].” (Fliess & Lexutt, 2019, p.66). The findings of articles 2 and 3 support this

proposition partially. It is found that a match between the type of service offering and the

structure of the service organization indeed is causally related to superior servitization per-

formance, while mismatch can lead to failure. However, the empirically identified relationship

is more nuanced than initially suggested in Proposition 2. Specifically, a separate service

organization is identified as appropriate for an advanced service offering containing both

SSP and SSC (see configurations 5FS and 5NFS in Table 5 in Lexutt (2019a, Article in

press), and configuration C in Table 5 in Lexutt (2019b, p.22)), but also for a limited service

offering (see configurations 2FS and 2NFS in Table 5 in Lexutt (2019a, Article in press) and

configuration A in Table 5 in Lexutt (2019b, p.22)). This is in line with Oliva & Kallenberg

(2003) who suggested that consolidating the offered services in one organization to concen-

trate the efforts for their deployment is an essential first step along the product-service con-

tinuum. At the same time, the findings of articles 2 and 3 indicate that with an SSP-oriented

service offering, an integrated service organization is preferable to achieve certain outcomes

(see configuration 4FS in Table 5 in Lexutt (2019a, Article in press) and configuration B in

Table 5 in Lexutt (2019b, p.22)). Close cooperation and integration between the product and

service business is one way to be successful with product-oriented services in the examined

cases, as also suggested by Neu & Brown (2005) and Visnjic & VanLooy (2013).

The existence of alternative configurations where the structure of the service organization is

not causally relevant at all (see Tables 5 and 6 in Lexutt (2019b, Article in press) and Table 4

in Lexutt (2019b, p. 21)) shows that superior performance can in some instances be

achieved regardless of organizational structure. At the same time, the results reveal the risk

associated with restructuring under the wrong conditions (Benedettini et al., 2017), as a

mismatch between structure and service offering consistently leads to a lack of success.

Consequently, the present thesis adds to the discussion regarding the “right” structure of the

service organization; first, by confirming that it is indeed a critical, causally relevant aspect of

servitization success; and second, by showing that it is a far more complex topic than sug-

gested in previous research, as the structure needs to fit the configuration of other organiza-

tional characteristics, and mismatch can lead to a lack of success.

The identification of a service-oriented corporate culture as a necessary condition for suc-

cess in both empirical studies emphasizes the importance of a cultural reorientation toward

services in the context of servitization. This finding confirms current literature and supports

Proposition 8 stating that “a service-oriented corporate culture has a positive impact on ser-

vitization success […]” (Fliess & Lexutt, 2019, p. 67). However, Proposition 8 also suggests

that a service culture is more important for advanced stages of servitization. The results of

the empirical analysis in articles 2 (Lexutt, 2019a, Article in press) and 3 (Lexutt, 2019b,

36

working paper) show that a service-oriented culture is in fact necessary for success regard-

less of the type of offering. It is therefore an essential precondition to be successful with ser-

vices throughout the entire product-service continuum.

In addition to refining our knowledge on aspects that have received some attention in serviti-

zation research, this thesis also examines success factors that have received limited atten-

tion so far. Specifically, decentralization, management commitment to services (Lexutt,

2019a) and a clearly defined service strategy (Lexutt, 2019b) are identified as necessary for

servitization success. This adds to the literature by providing empirical evidence for the

causal role these underresearched aspects play for servitization success. The identification

of a decentralized decision-making authority as necessary for overall success illustrates that

the distribution of power and the freedom of the service organization to set strategic goals

and deploy resources are more critical than the formal structure of the service organization.

The identification of managerial commitment to services as necessary for overall success

adds to our understanding of the role of management for servitization (Luoto et al., 2017).

Finally, the identification of a defined service strategy for service profitability reinitiates the

debate regarding planned versus emergent strategies (Kowalkowski et al., 2012).

By examining and discussing both the presence and the absence of the servitization-related

outcomes in articles 2 (Lexutt, 2019a) and 3 (Lexutt, 2019b), the present thesis contributes to

the scarce literature on unsuccessful servitization. Most current research focuses only on the

first aspect of the research question in this thesis “why are some organizations successful

with their servitization”, assuming that unsuccessful cases are mirror opposites of the suc-

cessful cases. This dissertation explicitly examines the second aspect of the research ques-

tion as well, by studying “why some organizations fail to achieve positive results with serviti-

zation”. Configurations that consistently lead to a lack of success in the examined cases are

identified (Tables 6 in Lexutt (2019a, Article in press) and 4 in Lexutt (2019b, p. 21)), clearly

demonstrating the asymmetric causality of servitization success and failure. Generally, a

mismatch between service offering and service structure as well as an overall lack of critical

conditions is found to be responsible for a lack of performance. While the conditions identi-

fied to impact positive servitization outcomes are used to explain a lack thereof as well, the

configurations differ, meaning that explanations of servitization success do not equally ex-

plain servitization failure. The service paradox and unsuccessful servitization are complex

causal phenomena in their own right and not just mirror images of success. They should

therefore be examined from a configurational perspective. By following this approach, the

present thesis paints a more complete and nuanced picture of servitization success and pro-

vides a more comprehensive answer to the posed research question than previous research.

37

The differentiation between sufficiency and necessity inherent in configurational research

also refines our understanding of success and failure. Four individual success factors are

identified as necessary for success with services: 1) a service-oriented corporate culture, 2)

management commitment to services, 3) decentralized decision making authority, and 4) a

clearly formulated service strategy. Without these factors, achieving servitization success is

difficult. This means that a lack of these factors explains why some manufacturers might

struggle achieving positive results from servitization. However, on their own they are not suf-

ficient for servitization success, meaning that just the presence of the necessary factors does

not mean that the company will achieve positive results from servitization. This is a more

nuanced finding than possible with, for example, regression or structural equation analysis,

where the identification of paths or models containing these factors would imply that they are

both necessary and sufficient for servitization success.

The present thesis makes several methodological contributions to servitization research.

First, it is an answer to the call for more quantitative research in the field (Raddats & Kowalk-

owski, 2014). As demonstrated in the first article, the vast majority of servitization research is

case-study based which constitutes the formulation of generalizable conclusions difficult. In

this thesis, fsQCA is applied to a large-N sample, calculating necessary and sufficient condi-

tions and configurations based on Boolean algebra and the set-theoretic rules of logical min-

imization (Schneider & Wagemann, 2012). Even though fsQCA relies on qualitative reason-

ing, since data are analysed by case and not by variable (Ordanini et al., 2014), it is a meth-

od of quantitative empirical testing. This is why this thesis contributes to the sparse quantita-

tive research in the servitization field.

The first article emphasizes the importance of measurable performance criteria for servitiza-

tion success. This dissertation contributes to that by proposing and adopting alternative ways

to conceptualize and operationalize servitization success and the service paradox. Specifi-

cally, the second article conceptualizes servitization success as the simultaneous presence

of service profitability and non-financial service success. This is captured set-theoretically in

the conjunction of these two outcome-sets which is named overall service success (see

Chapter 3 (Lexutt, 2019a, Article in press)). This is, to the best of the author’s knowledge, the

first conceptualization of servitization success in set-theoretic terms. Furthermore, the sec-

ond article identifies and discusses similarities and differences in the configurations leading

to service profitability and non-financial success. Most previous research does not examine

these aspects in detail. On this account, the present thesis adds more nuance to the com-

mon understanding of servitization success.

38

Similarly, the third article (Lexutt, 2019b) captures the service paradox as the inability to

achieve positive financial effects from servitization, either at the service level in terms of ser-

vice profitability, or at the company level in terms of overall profit growth. This widens our

understanding of both servitization success and the service paradox by showing that profita-

ble services do not necessarily equate a successful servitization.

The fact that the second and the third article share some of their main conclusions – success

is possible with different kinds of service offerings and depends on a match between service

offering and service structure as well as on a service oriented culture – demonstrates the

robustness of the results also when different outcomes and combinations of causal condi-

tions are used.

Finally, this dissertation is, to the best of the author’s knowledge, the first application of a

complete, state-of-the-art fsQCA in servitization. It includes and reports analyses of necessity

and sufficiency, for the presence and the absence of the outcomes, and considerations re-

garding membership distributions and logical contradictions. It utilizes the Standard Analysis

as well as the Enhanced Standard Analysis (Schneider & Wagemann, 2012). Previous quan-

titative research usually adopts net-effects approaches which are not suitable for capturing

complex causality. The few studies that do apply fsQCA in a servitization context do not

study the conditions or outcomes presented here, nor do they fully utilize the potential of

fsQCA (see Chapter 3 (Lexutt, 2019a, Article in press)). This dissertation therefore contrib-

utes to servitization research by applying an underutilized but highly relevant methodology

(Schneider & Eggert, 2014). It also contributes to configuration and success factor research

by demonstrating that servitization success and failure are configurational phenomena that

can be understood in terms of set relations.

To sum up, and to answer the research question in a nutshell, the following can be said

based on this dissertation: Some manufacturers are successful with their servitization, be-

cause they find the right configuration between service offering and service structure, while

fulfilling the necessary preconditions of a service culture, management commitment to ser-

vices, decentralization and a service strategy. Others fail to achieve positive results from ser-

vitization, either because they do not possess some of the necessary preconditions for ser-

vitization success, or because of a mismatch between their service offering and service

structure.

39

5.2 Limitations and future research In addition to the limitations already discussed in the respective sections of the articles in

Chapters 2 (Fliess & Lexutt, 2019, p. 72), 3 (Lexutt, 2019a, Article in press) and 4 (Lexutt,

2019b, p. 14), the present thesis has limitations stemming from the criticisms of success fac-

tor research. As stated in Chapter 1.4, the three main criticisms regarding most success fac-

tor research are that it does not adequately consider the ways in which performance ad-

vantage is competitively unstable; it uses data based on retrospective recall of informants;

and that it does not account for the causal complexity surrounding performance (March &

Sutton, 1997). While the present dissertation extensively deals with the third criticism, the

first two aspects are not explicitly addressed.

Performance advantage is competitively unstable, meaning that recipes for success dissemi-

nate through time, making it more and more difficult for organizations to achieve a competi-

tive advantage with the same recipe (March & Sutton, 1997). This is most likely also the case

for the configurations identified in the present thesis. The existence of several, equifinal

paths for success however weakens this effect. While this is recognized in this research, fu-

ture studies would benefit from a temporal approach based on longitudinal data. Such re-

search would be able not only to consider how recipes for success disseminate and thus

change over time, but also to capture the procedural, dynamic nature of the transition to ser-

vices along the product-service continuum, which is not examined in this thesis.

Furthermore, the measures of coverage reported for each of the configurations indicate

which of them are more common and which are rarer in the examined cases. Particularly the

rarer configurations with low unique coverage are attractive for future research. Such re-

search could examine whether these configurations become more prevalent over time, as

the more common configurations lose their competitive edge.

Regarding the second criticism, data based on retrospective recall is considered particularly

susceptible to bias, as respondents are likely to reconstruct the past to make it consistent

with current performance and to tell a coherent story (March & Sutton, 1997). The present

research uses objective, self-reported measures for the conditions and the outcomes. Even

though it does not ask the respondents to provide assessments regarding causal effects and

the outcome of interest was not revealed to the respondents, such measures tend to be posi-

tively biased. This was considered during calibration by adjusting the cross-over thresholds

for membership and non-membership accordingly (see Chapters 3 (Lexutt, 2019a, Article in

press) and 4 (Lexutt, 2019b, p. 8 ff.) and their Appendices). However, future research would

benefit from using independent measures of performance, also to avoid common method

bias (Hair et al., 2014). Another way to avoid drawing causal inferences from retrospective

40

recall is to gather data through direct observation, as utilized in action research (see for ex-

ample Clegg, Litle, Govette & Logue, 2017).

Another limitation of this dissertation is that only a small subset of the identified potential

success factors from the first article was examined empirically in the subsequent articles.

Future research should utilize the rich insight from the first article (see Table 6 in Fliess &

Lexutt, 2019, p. 70 ff.) and examine the impact of other company-related as well as custom-

er-related and environmental success factors on servitization outcomes from a configuration-

al perspective.

Specifically, drawing from traditional configuration research and the operations management

literature on servitization, the present research focuses on the domains of strategy, structure,

culture and leadership. It therefore examines the outcome of interest from an organizational,

meso-level. At this level, examining configurations of critical resources or capabilities (e.g.

(Rönnberg Sjödin, Parida & Kohtamäki, 2016; Wilden, Gudergan, Akaka, Averdung &

Teichert, 2018) would complement the findings of the present thesis and would therefore be

a fruitful avenue for future research.

However, as also shown in article 1 (Fliess & Lexutt, 2019), servitization is also affected by

the macro- and the micro-level. At the macro level, the influence of environmental conditions

such as competitiveness or dynamism (Fang et al. 2008) on the decision to servitize and on

servitization-related outcomes could be analyzed. Particularly configurations of environmen-

tal characteristics facilitating or inhibiting servitization performance would be of interest.

As discussed in Chapter 2 (Fliess & Lexutt, 2019, p. 69 ff.), the role of the customer remains

widely underresearched despite its critical influence on all aspects of servitization. In addition

to the suggestions already made in Chapter 2, Table 6 (Fliess & Lexutt, 2019, p. 70 ff.), this

research area could also benefit from adopting a configurational approach. For example con-

figurations of customer characteristics inhibiting or facilitating servitization, or configurations

of relationship characteristics for servitization success could be analyzed.

Servitization affects the individuals and teams that make up the micro-level of the organiza-

tion (Lenka et al., 2018). At the same time, the successful implementation of servitization

depends on individuals’ willingness and readiness to change (Lenka et al., 2018). Future

research could combine this insight with the configurational logic adopted in this study. Con-

figurations of values, attitudes and behaviors, at the employee, team or managerial level, and

their impact on the decision to servitize or successful servitization offer good potential for

future research.

41

Furthermore, this research is mostly rooted in the operations management tradition of serviti-

zation research. The conceptualization of servitization success as a causally complex phe-

nomenon opens avenues for the configurational examination of servitization from a services

marketing, PSS or service science perspective as well. The aforementioned examination of

customer or relationship characteristics would fall into the category of services marketing

servitization research. In addition, the impact of servitization on mutual value creation, or

configurations of customer-provider characteristics that benefit mutual value creation (Fork-

mann, Henneberg, Witell & Kindström, 2018) could be examined from a services marketing

perspective.

The product-service-systems research stream would benefit from examining configurations

of policies that facilitate or inhibit PSS dissemination. Since the acceptance and adoption of

PSS is an important theme in this community, configurations of customer or PSS characteris-

tics that facilitate adoption would be a fruitful research topic.

The service science community would particularly benefit from adopting a configurational

approach. The central element of service science research is the service system, which is a

configuration of different elements of people, technology and business (Chesbrough & Spoh-

rer, 2006). Future research could apply the corresponding methodology to identify different

service systems configurations and how they causally relate to service quality or the dissem-

ination of service innovations.

While contributing significantly to the scarce research about unsuccessful servitization, the

present thesis only scratched the surface of what constitutes the causal mechanisms leading

to servitization failure. More research is needed on the absence of servitization success, de-

servitization and servitization failure (Kowalkowski, Gebauer, Kamp & Parry, 2017; Kowalk-

owski, Gebauer & Oliva, 2017). This dissertation identifies configurations leading to the ab-

sence of servitization success. However, the absence of success is not necessarily the same

as failure. While some cases belonging to this set indeed report negative performance, also

organizations reporting neutral effects on performance belong to this set. In order to gain

further insight into the causal mechanisms leading to servitization failure, more organizations

reporting negative performance effects should be studied in the future. Future research

should also consider different explanations for servitization failure, for example by studying

how factors like costs, risks, environmental conditions and customer characteristics interplay

in producing the service paradox and failure.

Finally, the empirical examination that forms the basis for articles 2 and 3 was executed in

the German manufacturing industry. While a diverse range of sub-sectors was included (see

Table 2 in Lexutt (2019a, Article in press) and Table 1 in Lexutt (2019b, p. 19)) and Germany

42

can be considered representative of servitization in industrialized markets (Neely, 2013),

future research should consider different industries and markets. Particularly servitization in

developing economies is a fruitful avenue for future research, also in order to break free from

commonly assumed narratives in servitization research (Luoto et al., 2017). Technological

advancements and digitalization provide opportunities for innovative service business models

(Kamp & Parry, 2017) and drive servitization also in industries other than manufacturing

(Fliess & Hagenhoff, 2017). Ultimately, future research should consider the implications, op-

portunities and risks of digitalization and the Internet of Things for servitization.

43

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Curriculum Vitae

PERSÖNLICHE DATEN

Name Eva Lexutt

Geburtsdatum / -ort 18.01.1986, Düsseldorf

Nationalität Deutsch

AKADEMISCHE AUSBILDUNG

01/2013 – 09/2019 Promotion

FernUniversität in Hagen, Douglas-Stiftungslehrstuhl für Dienstleis-

tungsmanagement

Dissertation (kumulativ): Erfolg und Misserfolg der Servitization

10/2009 – 03/2011 Master of Science Internationales Marketing

Athens University of Economics and Business, Athen

Thesis: Store choice criteria and shopping behavior: A comparative

study in Greece and Germany

09/2007 – 07/2008 Erasmus-Austauschjahr an der Universität Trier

09/2005 – 10/2009 Diplom Marketing und Kommunikation

Athens University of Economics and Business, Athen

05/2005 Abitur

2. Gesamtlykeion Pyrgos, Griechenland

FORSCHUNGSINTERESSEN

Servitization und Sharing Economy, Nachhaltiges Konsumentenver-

halten, insbes. Konsumverzicht und Konsumwiderstand, Gender &

Marketing, B2B-Marketing, Internationales Marketing

58

BERUFSERFAHRUNG

Seit 07/2019 Projektmanagerin quantitative Marktforschung

IMW Köln

Seit 04/2016 Dozentin Internationales Management

Verwaltungs- und Wirtschaftsakademie Arnsberg

Lehrveranstaltungen in berufsbegleitenden Studiengängen zum

Betriebswirt und Bachelor

01/2013 – 12/2018 Wissenschaftliche Mitarbeiterin

Fernuniversität Hagen, Douglas-Stiftungslehrstuhl für Dienstleis-

tungsmanagement

Betreuung des Mastermoduls „Dienstleistungsmanagement –

Management von Dienstleistungsprozessen“, Betreuung von

Seminararbeiten (ca. 8 pro Semester), Betreuung von Abschluss-

arbeiten (ca. 7 pro Semester)

04/2012 – 12/2012 Marketing Specialist

Lödige Industries GmbH, Scherfede

Produktmarketing, Unternehmensmarketing, Internes Marketing

04/2011 – 03/2012 Assistentin Personalentwicklung

Lödige Industries GmbH, Scherfede

Rekrutierung internationaler Praktikanten und Trainees, Internes

Marketing und Kommunikation, Durchführen von Mitarbeiterzu-

friedenheitsanalysen

SPRACHEN

Englisch (C2)

Griechisch (C2)

Rumänisch (A2)

59

PUBLIKATIONEN

Beiträge in referierten Fach-zeitschriften

Lexutt, E. (2019, Article in Press). Different roads to servitization

success – A configurational analysis of financial and non-financial

service performance. Industrial Marketing Management (2019).

https://doi.org/10.1016/j.indmarman.2019.06.004

Fliess, S. & Lexutt, E. (2019). How to be successful with servitiza-

tion – Guidelines for research and management. Industrial Market-

ing Management, 78, 58-75.

Buchbeiträge Fliess, S. & Lexutt, E. (2016). Erfolgsfaktoren der Service Transiti-

on – eine systematische Literaturanalyse. in: Bruhn, M. & Had-

wich, K. Servicetransformation. Entwicklung vom Produktanbieter

zum Dienstleistungsunternehmen. Springer

Beiträge in referierten Ta-gungsbänden

Lexutt, E. (2019). The role of customer related factors for servitiza-

tion success – A two-step QCA. Proceedings of the Spring Serviti-

zation Conference, May 13-15, Linköping, Sweden.

Best Paper Award for the category case study

Lexutt, E. & Fliess, S. (2018). Disentangling the complex causali-

ties of servitization success with qualitative comparative analysis.

Proceedings of the Spring Servitization Conference, May 14-16,

Copenhagen, Denmark.

Best Paper Award for the category case study

Lexutt, E. & Fliess, S. (2017). What servitization leaders do differ-

ently – A configurational analysis of the success factors of service

transition. Proceedings of the Frontiers in Service Conference

2017, June 22-25, New York, USA.

Lexutt, E. & Fliess, S. (2017). Many roads lead to Rome – A Quali-

tative Comparative Analysis (QCA) of the success factors of ser-

vitization. Proceedings of the QUIS15 Symposium 2017, June 12-

15, Porto, Portugal.

Fließ, S. & Lexutt, E. (2014). Service transition from the customer

perspective. Proceedings of the ISBM Biennial Academic Confer-

ence 2014, San Francisco, USA.

60

STIPENDIEN, FÖRDERUNGEN

& AUSZEICHNUNGEN

2019 Förderung Konferenzteilnahme, Advanced Services Group

Abschlusstipendium der internen Forschungsförderung, FernUniver-

sität Hagen

2018 Best Paper Award for the category case study, Spring Servitization

Conference 2018

Interne Forschungsförderung Konferenzteilnahme, FernUniversität

Hagen

DAAD-Förderung zur Durchführung eines Seminars in Mittel- und

Osteuropa

2017 Einzelförderung der Gesellschaft der Freunde der Fernuniversität

e.V. zur Durchführung einer Unternehmensbefragung

Interne Forschungsförderung Konferenzteilnahme, Juli 2017, Fern-

Universität Hagen

Interne Forschungsförderung Konferenzteilnahme, Juni 2017, Fern-

Universität Hagen

DAAD-Förderung zur Durchführung eines Seminars in Mittel- und

Osteuropa

PROMOS-Stipendium für einen Fachkursaufenthalt, gefördert vom

DAAD und finanziert aus BMBF-Mitteln

2016 DAAD-Förderung zur Durchführung eines Seminars in Mittel- und

Osteuropa

2014 DAAD-Förderung zur Durchführung eines Seminars in Mittel- und

Osteuropa

Interne Forschungsförderung Konferenzteilnahme, FernUniversität

Hagen

Soest, den 21. September

61

Statement (Erklärung) Hiermit versichere ich an Eides statt, dass ich die Dissertation selbstständig und ohne Inan-

spruchnahme fremder Hilfsmittel angefertigt habe. Ich habe dabei nur die angegebenen

Quellen und Hilfsmittel verwendet und die aus diesen wörtlich oder inhaltlich entnommenen

Stellen als solche kenntlich gemacht. Die Hilfe einer Promotionsberaterin/eines Promotions-

beraters habe ich nicht in Anspruch genommen. Die Arbeit hat in gleicher oder ähnlicher

Form noch keiner anderen Prüfungsbehörde vorgelegen. Ich erkläre mich damit einverstan-

den, dass die Arbeit mit Hilfe eines Plagiatserkennungsdienstes auf enthaltene Plagiate

überprüft wird.

Soest, den 21. September 2019

Eva Lexutt