Investigating the goal-oriented use of IoT in servitization:an affordance theory perspective

Abstract

Manufacturers are seeking differentiation strategies as products are commoditised, markets are saturated with competitors, and the overall growth of the manufacturing industry declines. Servitization is an effective strategy based on transforming the manufacturer from being product-centric to becoming customer-centric through the integration of products and services. This transformation is challenging in terms of service development processes, customer relationship management, and risk management for which manufacturers require practical enablers.Internet of Things (IoT) is considered as a critical enabler of servitization. The integration of IoT in the manufacturers’ products with a focus on servitization is, however, challenging and complex. Literature has focused on exploring the potential value of IoT and its technical specifications. Such a focus has ignored the manufacturers’ role in making goal-oriented use of IoT and the process of integrating it in the manufacturers’ businesses. By adopting the affordance theory as an actor and process-focused lens, this thesis aims to contribute to the servitization literature by investigating how manufacturers use IoT in servitization.The thesis identifies four types of opportunities to use IoT as perceived by the manufacturer, three types of actions for realising these opportunities, and a cascading relationship between these opportunities that results in IoT enabled servitization. It argues that the use of IoT to enable servitization is a step-by-step process starting with gathering essential information about the manufacturer’s product and its use, followed by improving product performance using the gathered information, and finally supporting the customers’ businesses through additional services. The IoT plays the role of a platform that creates servitization enabling outcomes. The manufacturers play an active role in deciding the use of IoT based on their organisational goal and taking actions based on the IoT’s features.The thesis contributes to servitization literature by introducing a new perspective to study the process of using IoT in servitization and by arguing that the services created from the use of IoT do not exist independent of each other. The literature on affordance theory is extended in this thesis through its application in a new context on an organisational level. The thesis also substantiates the theory’s key principle of affordance dependency using new empirical data. Practically, the thesis provides a framework for practitioners that allows managing the steps involved in IoT enabled servitization, the role of individual IoT features driving these steps and their role as an actor in this process.