The role and impact of digital capabilities on value co-creation of servitising organisations

Abstract

Manufacturers are challenged to embrace service provision to customers to increase profitability, achieve stable revenue streams and become more competitive. The trend towards servitisation requires manufacturers to develop the digital capabilities to interact and co-create value with customers. To date, little research has been carried out to investigate the digital technologies, and the capabilities required to provide such services. Understanding the role digital capabilities play in servitisation, and how these capabilities enable value co-creation, is vital to draw a customer into a joint process. This study fills the gap by presenting a multi-level framework that characterises value co-creation for servitisation using digital capabilities.With regards to base services, manufacturers’ emphasis is on supporting product functionalities and reliability. However, advanced services are focused on helping customers’ processes, and achieving outcomes. They require a higher level of customisation, than base services, demand greater intensity in customer relationships, and need an increased focus on assisting customers in their value creation process. These complexities require new capabilities for addressing dynamic customer interactions, business strategy, and resources integration.Studies are in agreement concerning the importance of digital capabilities in this context, but provide little insight on their constituents, or how they support value co-creation. Prior studies have explored value co-creation across multiple research communities. As a result, a variety of approaches and theoretical perspectives are provided in related fields. This study examines these problems, drawing on an extensive qualitative enquiry of 15 servitising firms.The study contributes to knowledge by developing a multilevel framework of value co-creation in servitisation, showing how identified digital capabilities enable value co-creation. The findings indicate that specific prerequisites are needed to understand customer demand, which drives stakeholders into the next level of the value co-creation process termed service co-design, which may lead to strategic alignment.