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
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