How do servitization challenges affect business performance in servitized firms with different strategic focuses? – An empirical study based on companies adopting servitization in the UK

Servitization challenges have gained enormous attention from both academics and practitioners, as an increasing number of product-centric companies are actively seeking business growth by adopting a servitization strategy. Although prior studies investigate servitization challenges from multiple aspects, the performance implication of the challenges remains unclear. Moreover, the interplay between the challenges and different servitized businesses needs an in-depth investigation. The aim of this research project is to explore the impacts of servitization challenges on business performance and how they are different in servitized businesses with different strategic focuses. In so doing, a three-step methodology was used. First, a systematic literature review (SLR) was conducted on the servitization challenges, leading to the establishment of a theoretical model illustrating the underlying relationship between servitization challenges (described as organisational structure (OS), business model (BM), development process (DP), customer management (CM) and risk management (RM)), its benefits (in terms of strategic, financial and marketing) and the firm’s performance. Following this, a sequential explanatory mixed method was adopted, in which the quantitative (survey) (2nd step) and the qualitative (case study) (3rd step) studies were conducted in a sequential manner. The quantitative survey plays a dominant role that aims to validate the theoretical model with the engagement of managerial representatives from UK-based servitized companies. After this, a qualitative case study was carried out, as a supplement, to further explain the survey findings and explore how servitization challenges manifest differently in servitized businesses with different strategic focuses. This study generated two key findings: 1) The findings demonstrate that the servitized companies overcoming organisational structure (OS) and business model (BM) challenges have positive impacts on the firm’s performance, while the impact of the other challenges is unsupported. 2) The study suggests that the manifestation of servitization challenges is different in servitized business with different strategic focuses. Particularly, those companies with the intention of supporting the customer’s operation through integrated solutions face more challenges. Overall, this study contributes to the advancement of servitization research by illustrating the performance implication of servitization challenges, and further advances our understanding of how different servitization types interact with the challenge