Value capture from service business models

Navigating Competitive Dynamics with Intellectual Property Strategies in Service Business Ecosystems in the Context of Servitizing Manufacturers 

Next to building offshore factories in developing economies and aiming for cost leadership to sustain competitive advantage, manufacturing companies have also chosen to develop services and solutions complementing their products, so-called integrated product-service offerings. In a seminal paper published in 1988, Vandermerwe and Rada observed this movement and were the first to denote this phenomenon as the servitization of business. When applying the lens of the more recent business ecosystem approach, it becomes apparent, however, that a servitizing manufacturing firm may develop capabilities during this transition process that have previously been performed by other actors downstream in the value chain, thus creating competitive tensions with the incumbent firms.

In this research project we focus on the competitive challenges exerted by servitizing manufacturers on a particular group of actors in a business ecosystem whose competitive position is most obviously affected by servitization. We propose to name this group of business ecosystem actors Incumbent Service Providers (ISP) and define them as firms that provide advanced services even before manufacturing firms embark on a servitization transformation journey. Ultimately, this research project has the following goals:

• To develop an understanding of the effects of servitization on ISP’s competitive position in a service business ecosystem; and
• To apply this knowledge for the identification of a bespoke portfolio of Intellectual Property (IP) and respective strategies enabling ISP to sustain their competitive advantage in a service business ecosystem affected by the servitization of manufacturing.

This will be accomplished by first investigating the challenge mechanisms that servitizing manufacturers exert on a services business ecosystem (initial results from our research are shown in the figure below) and subsequently by identifying IP management strategies utilized by service providers.

The primary focus of this project will initially be the commercial aircraft maintenance, repair and overhaul industry sector, but we aim for an analytic generalization to other industry sectors.

Project lead: Alexander Mörchel

Publications

Moerchel, A. and Tietze, F. (2019). How Servitizing Manufacturers Impact Ecosystem Dynamics – The Case of Incumbent Service Providers in Commercial Aircraft Maintenance, Repair and Overhaul. In: Proceedings of the Spring Servitization Conference. Birmingham: The Advanced Services Group, pp. 291-293.