Servitization: Disentangling the impact of service business model innovation on manufacturing firm performance

Abstract As manufacturing businesses operate in an ever more competitive, global economy where products are easily commoditized, innovating by adding services to the core product offering has become a popular strategy. Contrary to the economic benefits expected, recent findings pinpoint implementation hurdles that lead to a potential performance decline, the so‐called ‘servitization paradox’. In this paper, we analyze this paradox by disentangling the value creation and value appropriation processes of 44 national subsidiaries of a global manufacturing firm turned product‐service provider, in the 2001–2007 period. Our findings show that the firm under study is able to successfully transcend the inherent…