Leveraging Digitalization for Advanced Service Business Models: Challenges and Opportunities for Circular Economy

Dear Colleagues,

Industries are entering the fourth industrial revolution (Industry 4.0), which is transforming companies and industrial networks from their roots. Most practitioners view this transformation through a positive lens, according to recent BCG and PwC reports, Industry 4.0 is expected to increase efficiency by 15-20% and account for more than 20% of the revenue generation over the next five years. These numbers highlight that use and application of digital technologies represents a significant potential for business model transformation, while providing new revenue and value-producing opportunities. In manufacturing industry, smart and connected digitalized machines and solutions are expected to result in higher efficiency of resources and equipment and, therefore, simultaneously increase sustainability levels and enable cost reductions by decreasing energy consumption, lower scrap rates, and diminish production downtime through preventive maintenance. These perceived benefits are driving numerous companies to experiment with implementing advanced service business models, in which revenue is generated over the lifecycle according to the delivered solution (e.g. pay-per-service-unit, performance-based).

This special issue calls for a more critical discussion and outlook for creating business value through digitalization. Such a perspective is needed because prior studies acknowledge that many companies focus too heavily on developing digital technology per se rather than leveraging it through development of advance service business models. Business model explains the design or architecture of the company's mechanisms to create, deliver, and capture value. Inferior business models imply that companies would not be able to realize the economic and sustainable value of digitalization transformation. In addition, current advance service business model practices are often too firm-centric rather than industrial network (e.g. providers, customers, service partners, and digital actors) centric. Therefore, important questions related to the digitalization transformation such as distribution of activities, roles, models for cost- and revenue sharing, procurement, value creation and capture are currently left unanswered. Indeed, implementation of such advanced service business models requires a radical transformation of the companies’ ecosystems (especially customers) to a state in which value co-created among providers, ecosystem partners, and customers by optimizing resource usage and operation and leveraging digital technologies.

Against this backdrop the special issue explores contributions focusing on increasing knowledge on how firms can leverage digitalization for advanced service innovation business models. In particular knowledge is sough concerning sustainable business models based on advanced services, which represent the highest potential for environmental impact by incorporating the logic of circular economy. Given the practical and scholarly relevance of to the above stated issues, we call for a holistic and rigorous assessment of this possible digitalization transformation in industrial marketing, strategic management, environmental management and innovation management. Opportunities to elucidate the debate and contribute to this SI are manifold and include, but are not limited to, the following:

Reference

1. Cenamor, D. Rönnberg Sjödin, V. Parida, Adopting a platform approach in servitization: Leveraging the value of digitalization, International Journal of Production Economics, In press,
2. Parida, V., Sjödin, D. R., Wincent, J., & Kohtamäki, M. (2014). Mastering the transition to product-service provision: Insights into business models, learning activities, and capabilities. Research-Technology Management, 57(3), 44-52.
3. Reim, W., Parida, V., & Örtqvist, D. (2015). Product–Service Systems (PSS) business models and tactics–a systematic literature review. Journal of Cleaner Production, 97, 61-75.
4. Tukker, A. (2004). Eight types of product–service system: eight ways to sustainability? Experiences from SusProNet. Business strategy and the environment, 13(4), 246-260.
5. Tukker, A. (2015). Product services for a resource-efficient and circular economy–a review. Journal of cleaner production, 97, 76-91.

Prof. Dr. Vinit Parida
Dr. David Rönnberg Sjödin
Guest Editors

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