The current issue and full text archive of this journal is available on Emerald Insight at:

www.emeraldinsight.com/1757-5818.htm

JOSM
26,3
Seeking competitive advantage
with service infusion:
a systematic literature review
394 Ville Eloranta
Received 23 December 2013
Department of Industrial Engineering and Management,
Revised 20 May 2014 School of Science, Aalto University, Espoo, Finland, and
15 November 2014
16 March 2015 Taija Turunen
Accepted 22 April 2015 Department of Management Studies, School of Business,
Aalto University, Helsinki, Finland and
Cambridge Service Alliance, University of Cambridge, Cambridge, UK

Abstract
Purpose – The purpose of this paper is to analyze how the service infusion literature explains
competitive advantage through services. The four strategic management theories – competitive forces,
the resource-based view, dynamic capabilities, and relational view – are applied in the analysis.
Design/methodology/approach – A systematic literature review analyzes the links between the
service infusion and strategy literature.
Findings – The review reveals that although discussion of service infusion applies strategic
management concepts, the stream lacks rigor with respect to construct definition and justification.
Additionally, contextual variables are often missing. The result is an over-emphasis of contextually
bound measures, such as technology, and focal actors.
Research limitations/implications – The growing trends toward social networks, co-specialization,
actor dependency and shared resources encourage service infusion scholars to focus on network-related
and relational capabilities, co-opetition, open business models, and relational rent extraction. Furthermore,
service infusion research would benefit from considering strategy-based theoretical discussions,
constructs, and constraints that would improve the scientific rigor, impact and contribution.
Originality/value – This paper represents a systematic attempt to link the service infusion literature with
strategic management theories and thoroughly analyzes the knowledge gaps and possible misconceptions.
Keywords Servitization, Dynamic capabilities, Competitive advantage, Resource-based view,
Relational view, Service infusion
Paper type Literature review

1. Introduction
The competitive pressures of mature markets has forced manufacturing organizations
to provide customers with more comprehensive and customized value offerings (Baines
et al., 2009; Wise and Baumgartner, 1999; Vandermerwe and Rada, 1988). A stream
of literature has attempted to capture the essential characteristics of the change toward
customized solutions by focussing on the increase of services and customer orientation in
businesses. This phenomenon, conceptualized as service infusion[1], has shown that
the transformation from transactional business models to solutions is complex and

© Ville Eloranta and Taija Turunen. Published by Emerald Group Publishing Limited. This
Journal of Service Management article is published under the Creative Commons Attribution (CC BY 3.0) licence. Anyone may
Vol. 26 No. 3, 2015
pp. 394-425 reproduce, distribute, translate and create derivative works of this article (for both commercial &
Emerald Group Publishing Limited
1757-5818
non-commercial purposes), subject to full attribution to the original publication and authors.
DOI 10.1108/JOSM-12-2013-0359 The full terms of this licence may be seen at http://creativecommons.org/licences/by/3.0/legalcode.
multifaceted. Organizations must design new capabilities, business models, and processes Seeking
to enable and support this paradigm shift (Lightfoot et al., 2013; Baines et al., 2009; competitive
Brax and Jonsson, 2009; Kindström and Kowalkowski, 2009; Oliva and Kallenberg, 2003;
Mathieu, 2001a, b; Matthyssens and Vandenbempt, 1998; Levitt, 1983).
advantage
Empirical evidence suggests that the connection between the expansion of service
offerings and firm performance is not straightforward, and even questionable (Neely,
2008; Brax, 2005; Gebauer et al., 2005). The service infusion literature refers widely to 395
theories of strategic management to argue for the benefits and possible service-based
competitive advantage. Although strategy focussed theories are widely cited in
discussions of service infusion, there seems to be a great deal of confusion and
redundancy regarding theories that might explain competitive advantage – or its
absence – in service-oriented strategies. The most cited theories to explain competitive
advantage from service infusion are the market power and competition paradigm
(Porter, 1980), the resource-based theory (Barney, 1991; Rumelt, 1984; Wernerfelt, 1984),
dynamic capabilities (Teece et al., 1997), and relationships and network-based
argumentation (Dyer and Singh, 1998).
To clarify the underpinnings and premises of competitive advantage from service
infusion, we reviewed and analyzed the service infusion literature from the perspective
of strategic management. We integrate two, somewhat distinct, discussions to
reveal the theoretical underpinnings influencing the development of service infusion as
an area of research. Thus, our main research question guiding our review and analysis
is the following:
RQ1. How does the service infusion literature explain competitive advantage
through services?
By connecting the strategy literature with the empirically motivated service infusion
stream, this paper responds to recent studies (e.g. Gebauer et al., 2012b) and
complements existing works (e.g. Lightfoot et al., 2013; Velamuri et al., 2011) to reveal
the nuances of the link established between the service infusion research and strategic
management theories. Our analysis notes the synergies of the research streams,
yet reveals construct and contingency ambiguity leading to biases that could be
resolved by enhancing the connections between the research streams.
This paper is structured as follows. First, we summarize the strategy literature to
form a unitary and concise view of the past and present state of the competitive
advantage discussion in the strategy discipline. Then, we present four distinct streams
that compose the theoretical framework for our analysis. After that, the methodology
we used to analyze the service infusion literature is explained. Next, we proceed with
a systematic analysis explicating various strategic approaches within the service
infusion literature. Finally, the implications of the findings are discussed, with an
emphasis on addressing the gaps in the service infusion literature, and presenting
directions for future research.

2. Strategic management theories

In this section, we summarize the major research streams in the strategic management
literature that address sources of competitive advantage. We have selected strategic
management theories based on the ideology that firms (with strategic actions) shape
market structures in their favor, as this is also the ideology behind service infusion.
This eliminates evolutionary theories that assume companies cannot affect their
market survival with strategic decision making (e.g. industry evolution, path
JOSM dependency). The analysis here focusses on theories applied within the discipline
26,3 of strategic management, identifying key discussions around “competitive advantage.”
We rely on several papers that summarize the development of strategy discussions
(see, e.g. Barreto, 2010; Wang and Ahmed, 2007; Borgatti, 2003; Dyer and Singh, 1998;
Teece et al., 1997; Wernerfelt, 1995; Peteraf, 1993). Four distinct strategic views
informed our analysis: market forces, the resource-based view (RBV), dynamic
396 capabilities approach, and relational view. We analyze the central aspects of each
approach to determine the argument for the source of competitive advantage with an
emphasis on theory evolution and the current theory stage. The following sections
present an overview of the chosen strategic theories.

2.1 Market forces, industry architecture, and strategic conflict

The dominant paradigm of strategy research during the 1980s was competitive market
forces (Porter, 1980). This approach views industry structure as a having strong
influence on strategic formulation (Utterback and Suárez, 1993). Market dynamics and
structure assert the rules under which companies operate. Research has argued that
supernormal returns are the result of a firm’s membership in a structurally favorable
industry (Klepper, 1996). In the competitive forces model, five industry forces – barriers
to entry, threat of substitution, bargaining power of buyers, bargaining power
of suppliers, and rivalry among industry incumbents – determine the profit potential
and success of an industry or sub-segment of an industry (Porter, 2008).
This approach is relevant when firms defend their market position or try to
influence competitive forces. The discussion on market forces was accompanied by the
dominant game theory approach (Shapiro, 1989). The intention was to link
the economic discussion with competitive interaction between firms. According to
this view, firms influence the market structure and its behavior and shape the market
environment to their benefit (Shapiro, 1989). Game theory formalizes various business
behavior-type arguments (e.g. predatory pricing and patent races) and has increased
our understanding of the sources of competitive advantage (Teece et al., 1997; Axelrod
and Hamilton, 1981). Strategic behavior is dependent on “game playing” (i.e. firms react
in response to anticipated competitor actions). Concepts such as “first-mover
advantage” (e.g. Gilbert and Newbery, 1982) and “price competition” (Shaked and
Sutton, 1982) have been widely discussed. When competitors do not have ingrained
competitive advantages, the moves and countermoves of competitors can be effectively
formulated in terms of game theory (Tirole, 1988). For example, according to game
theory, rents accrue from the intellectual ability of managers to “play the game”
(Teece et al., 1997). This theory is still widely applied e.g. in internationalization studies
(e.g. McManus et al., 2008; Birkinshaw et al., 2005).

2.2 The RBV

In contrast, the resource-based approach argues that differences between firms are
primarily the result of firm heterogeneity with respect to their bundles of resource and
capability endowments (Barney, 1991, 1986; Rumelt, 1984; Wernerfelt, 1984). Firms
can achieve sustainable competitive advantage through the accumulation of strategic
assets that are hard to imitate, substitute or trade (Amit and Schoemaker, 1993).
Firm resources include all assets, capabilities, organizational processes, firm attributes,
information, knowledge, etc., controlled by a firm that enable the firm to conceive of
and implement strategies that improve its efficiency and effectives (Barney, 1991;
Daft, 1983). Such resources are defined as “an asset or input to production (tangible Seeking
or intangible) that an organization owns, controls, or has access to on a semi-permanent competitive
basis” (Helfat and Peteraf, 2003, pp. 999). While offering a simplified prescriptive
framework for resource-based strategic management, the study also characterizes
advantage
the resources that provide sustainable competitive advantage using the criteria
of valuable, rare, inimitable, and non-substitutable or “being-organized” (VRIO: Barney,
1995; earlier, VRIN: Barney, 1991). 397
Since then, resource-based frameworks have been criticized and extended
(Kraaijenbrink et al., 2010). The stream has begun to extend the firm’s boundaries to
the external environment and shared resources. Most resource-based contributions
have evolved toward the dynamic capability perspective (Teece et al., 1997; Mahoney,
1995). The RBV yields contributions to the entrepreneurial side of business
(Verbeke and Yuan, 2013) and the formation of resources within a single
organization (Nakano et al., 2013; Netland and Aspelund, 2013; Moreno et al., 2012;
Henard and McFadyen, 2012). While acknowledging the existence of criticisms and
extensions (e.g. Eisenhardt and Martin, 2000), we believe that RBV has contributed
strongly to our understanding of competitive advantage of a firm.

2.3 Dynamic capabilities

Compared to the classical version of RBV, the dynamic capabilities approach argues that
competitive advantage originates from a firm’s ability to integrate, develop, and
reconfigure internal and external competencies and resources to address rapidly changing
environments (Teece et al., 1997). These capabilities are firm-specific managerial and
organizational processes that can be, e.g., sensing, seizing, and reconfiguration capabilities
(O’Reilly and Tushman, 2008). Thus, instead of a unique set of resources, the firm’s ability
to adapt, reconfigure, and innovate in changing market conditions are central to
competitive advantage (Hobday, 1998; Roberts, 1998; Quinn, 1985).
The dynamic capabilities approach addresses the RBV concern for company inertia
by emphasizing dynamic, entrepreneurial approaches to volatile and evolutionary
market situations (Zahra et al., 2006). In recent dynamic capabilities research,
Teece (2007) acknowledged the “systems perspective” and the connections between the
firm and its ecosystem, for example, on innovation (Chesbrough, 2003), organizational
learning (Powell, 1998), or in the creation of the output (Shan et al., 1994). The systems
perspective argues that specialization leads to a need for open innovation processes
and integration, which involves the customer, suppliers, and complementary
organizations (Lichtenthaler and Lichtenthaler, 2009). The goal is to find new, value-
enhancing combinations inside the firm and between different external enterprises
through alliances (Eisenhardt and Martin, 2000). Coordination and orchestration
are critical sources of sustainable competitive advantage (Wales et al., 2013). Recent
contributions have built on dynamic capabilities and focus on the role of technology
in the formation of dynamic capabilities (Bernroider et al., 2014), the international
aspects of dynamic capability formation (Sambharya and Lee, 2014; Teece, 2014),
clarification of cross-organizational boundaries of dynamic capability building (Cheng
et al., 2014; Gulati et al., 2000), and the platform perspective (Vickery et al., 2013).

2.4 Relational view

According to Dyer and Singh (1998, pp. 661), although earlier contributions to strategy
have significantly impacted knowledge concerning the achievement of above-normal
JOSM returns by firms, they do not focus sufficiently on the network relationships within
26,3 which the firm is embedded. The relational view treats the inter-firm network as a unit
of analysis and argues that idiosyncratic, inter-firm linkages may be a source of
relational rents and competitive advantage (Lavie, 2006; Dyer and Singh, 1998).
Thus, Dyer and Singh (1998) focussed on inter-organizational rent generation, stressing
the importance of dyadic network routines and processes. Specifically, the interest was
398 in relational inter-firm knowledge sharing (Grant, 1996) between actors,
complementary resource endowments, governance methods, dyadic network barriers
to imitation, and the sharing of relational rents between actors (Dyer et al., 2008).
Lorenzoni and Lipparini (1999) extended the discussion beyond the impact of single
alliances by considering a set of relationships that should be activated. Their argument
favors the view that inter-firm networks can be shaped and deliberately designed.
In other domains, the topic has been discussed in relation to business ecosystems
(Adner and Kapoor, 2010; Teece, 2007; Iansiti and Levien, 2004; Moore, 1993), industry
architecture (Pisano and Teece, 2007; Jacobides et al., 2006), and supply networks
(Choi and Krause, 2006; Lee, 2004; Lamming et al., 2000).
Contrasting with the RBV is the argument that a firm’s critical resources may
extend beyond its boundaries. Dyer and Singh (1998) argued that a capability, as
defined by Teece et al. (1997), even a network-related one, is not a sufficient condition
for realizing relational rents. However, the relational view (as the term “view” suggests)
augments resource-based and dynamic capabilities-based strategies. Instead of
creating a new paradigm, the relational approach focusses on the concepts that
it deems the most significant in the networked business environment – the change in
a unit of analysis to extend a firm’s boundaries perhaps being the most fundamental
contribution to the strategic discussion. This stream has attracted scholarly interest,
and the theory has been applied in a variety of studies that emphasize innovation
possibilities in relational networks (Inemek and Matthyssens, 2013; Rass et al., 2013;
Dahlander and Frederiksen, 2012; Castaldi et al., 2011; Sammarra and Biggiero, 2008)
and social capital development through inter-organizational networks (Rass et al., 2013;
Laursen et al., 2012; Dahlander and Frederiksen, 2012; Zaheer et al., 2010; Borgatti and
Cross, 2003; Yli-Renko et al., 2001).
Table I summarizes the strategic management disciplines.

3. Method
Having summarized the approaches on strategy and management theories that address
the sources of competitive advantage, we now focus on service infusion-related articles
to analyze the links between these two distinct research streams. The research method
consisted of 11 stages. First, the search criteria were set. Then, we conducted initial
literature queries using Thomson Reuters Web of Science (WOS) as the primary search
tool. The results were content analyzed, and the main outlets were identified
for discussion, facilitating higher resolution queries to the most significant journals
using the journals’ own tools. We then content analyzed the journal-specific results and
merged them into one data set. To verify that our literature sample included
the relevant articles, a secondary literature search engine (SciVerse Scopus) was used
with the same search criteria as the initial WOS search. After duplicate checks and
content analysis, the results were again merged, which provided a primary set of
literature for our analysis. We complemented this set with additional strategy-related
articles identified in the most comprehensive literature review of the service infusion
research stream to date (Lightfoot et al., 2013). Additionally, we added a number
 Level of
Seeking
Theory Sources for competitive advantage analysis See e.g. competitive
Industry Porter (1980, 2008), Shapiro (1989),
advantage
Market The industry structure determines
forces and limits strategic choices and any Utterback and Suárez (1993)
available competitive advantage
Resource- Competitive interaction and Organization Barney (1991), Rumelt (1984),
based entrepreneurial actions can be used Wernerfelt (1984), Helfat and Peteraf 399
perspective to manipulate the market (2003)
environment. The competitive
advantage lies in the upstream and
is based on the organizations’
idiosyncratic and difficult-to-imitate
resources
Dynamic Competitive advantage depends on Organization Quinn (1985), Teece et al. (1997),
capabilities a firm’s capabilities to adapt, Hobday (1998), Roberts (1998),
integrate, and reconfigure skills, Powell (1998), Eisenhardt and
resources, and functional Martin (2000), Teece (2007)
competences in a dynamic
environment
Relational Competitive advantage can be only Industry Dyer and Singh (1998), Lorenzoni
view gained through the joint and Lipparini (1999), Chesbrough Table I.
idiosyncratic contributions of (2003), Lavie (2006) Summary of the
specific alliance partners and the strategic
service ecosystem management theories

of individual articles to provide sufficient background information on specific research

results, theories, or terms referred to in the included literature. Finally, we extended the
set with a few seminal articles identifying which items our paper set uses in defining
servitization and service infusion.

3.1 Search terms and sources

We decided to include only academic journal articles and excluded working papers and
conference papers in the service infusion and servitization literature search criteria.
This decision maintains the rigorousness of the review. The rapid evolution of this
research field has provided abundant but conflicting views concerning service infusion,
and conference and working papers are contexts for this debate. Thus, to maintain
focus on the extant views of service infusion, we focussed on articles evaluated by
extensive peer review processes of the academic journals.
The selection of the search terms required significant analysis and refinement.
Many terms refer to the phenomenon of manufacturers moving toward service
offerings. The most common terms are “servitization” (Baines et al., 2009;
Vandermerwe and Rada, 1988) and “service infusion” (Brax, 2005). Some researchers
use the terms “service-driven manufacturing” (Gebauer et al., 2012b), “service addition”
(Matthyssens and Vandenbempt, 2010), “service transition” (Fang et al., 2008),
“high-value manufacturing” (MacBryde et al., 2013), and “tertiarization” (Léo and
Philippe, 2001), as well as more general level concepts such as “service orientation”
(Martin and Horne, 1992), “servicization” (Quinn et al., 1990), and “servicizing” (Reiskin
et al., 1999). Recent service infusion literature also focusses on solution business,
referring to that construct primarily by use of the terms “integrated solutions,”
JOSM “customer solutions,” “total solutions,” and “business solutions” (Nordin and
26,3 Kowalkowski, 2010).
This paper focusses on the strategic and dynamic process of moving from product
orientation to service orientation. Thus, we focus on the transition process from one
strategic orientation to another; that is, a change in strategy to gain competitive
advantage. We also focus on the context of manufacturing. In our search, we aim to use
400 terms that capture the transition phenomenon and terms that are common in the
research stream. Therefore, we decided to focus primarily on the terms “service
infusion” and “servitization.” Although both terms have certain shortcomings, they are
the most commonly used in the discussions referred to here and within the scope of our
analysis. In our literature search, we also included different variations of the “solution”
concept to adhere to the current scholarly discussion, which integrates the discussion
of solutions into the service infusion context. To verify the completeness of the study,
we also included “service orientation,” “service addition,” and “service-driven
manufacturing” to our general search terms. However, it must be emphasized that
these results showed substantial overlap among the results provided by the primary
keywords. The keywords of “high-value manufacturing” and “tertiarization” were not
included because of their lack of popularity in scholarly discussion. The same applies to
“servicization” and “servicizing,” which seem not to be widely used, especially in
mainstream discussions of servitization.
After selecting the search terms, we defined the criteria for refining and limiting the
results. Because this literature study focusses on the construct of competitive
advantage as defined in the strategic management research stream, we set a limitation
criterion of including only articles that discussed “competitive advantage” and
“strategy.” Additionally, because the discussion of service infusion, servitization,
and solutions also appears in contexts other than manufacturing, we decided to include
only papers that refer exactly to “manufacturing.”

3.2 Searches and content analysis of the results

Using the abovementioned criteria, we searched the Thomson Reuters WOS using the
“science citation index expanded” and “social sciences citation index” databases.
The search resulted in 53 articles. The contents of the papers were analyzed, which
revealed that although the criteria were set to “competitive advantage” and
“manufacturing,” some articles should be excluded because they only addressed the
target contexts in side notes. From a total of 53 articles, 22 were excluded because they
exhibited only a weak link to the competitive advantage discussion. We excluded one
article because it did not focus on the manufacturing setting. There were also two
editorials within the excluded papers. In summary, the first search yielded 53 articles,
of which 28 were included and 25 were excluded. Table II summarizes these results.
The content analysis of the initial search also revealed that the discussion on service
infusion-related competitive advantage has rapidly evolved during the last two
decades. The most recent articles rigorously elaborate the concept and provide
articulate references to the strategic management theories. However, particularly in
older articles, such reflections are overly general. Although the papers reflected
competitive advantage, they did not systematically and coherently address it (e.g. in
article topics, keywords, abstracts, and citations). Because the literature search engines
rely on fields such as keywords and citations, we conducted a more in-depth search that
included content that related to the search context to capture a full picture of the
discussion on service infusion and competitive advantage, including earlier texts.
Results of the searches and inclusion/exclusion analysis
Seeking
WOS JOSM IJOPM IMM SCOPUS competitive
Total number of articles 53 26 19 51 112 advantage
Included 28 11 4 18 30
Excluded 25 15 15 33 82
Exclusion criteria
Weak link to competitive advantage discussion 22 8 10 18 38 401
Editorial 2 1 2 3 1
Not manufacturing related 1 6 2 5 25
Not service infusion related 1 7
Conference paper 10
Book chapter 4
Lecture notes 1
No access 3
Origins of the articles in the merged, final data set
Paper sources Total no. of %
articles
Matching search criteria 58 73
“Seminal article” 4 5
Cites research, theory or term referred by an 7 9
existing article Table II.
Additional articles from the existing literature 10 13 Summary of the
review method

For these searches, we used the search functionalities of individual journals because the
literature search engines do not allow targeting of the actual content of articles.
Performing these queries for all journals within the WOS results is not feasible; therefore,
we decided to focus our detailed queries on the most popular outlets. The content analysis
of the initial WOS query revealed that the academic discussion on service infusion
has been published mainly in three journals: Journal of Service Management ( JOSM),
International Journal of Production and Operations Management (IJOPM), and Industrial
Marketing Management (IMM). Detailed literature searches were conducted on these
publications. It is important to emphasize that this limiting focus on the three most
popular servitization and service infusion journals applies only to these journal-specific
searches; for all other searches, we have set no such restrictions.
The journal-specific searches found 26 articles in JOSM, 19 in IJOPM, and 51 in
IMM. Using the same criteria that we used for the initial WOS-originated papers,
we analyzed the content of these journal articles with the following results. Of the
JOSM articles, 11 were included and 15 were excluded; of the IJOPM articles, four
were included and 15 were excluded; of the IMM articles, 18 were included, and 33 were
excluded. After performing all search queries and content analyses, we merged the
search results (61 articles) and removed the duplicates (12). The resulting data set was
composed of 49 articles.
To ensure that WOS and individual journal searches were sufficiently exhaustive,
we ran a secondary search with SciVerse Scopus, using the same criteria as we had
used for the WOS search. We retrieved a total of 112 results. Using similar inclusion
and exclusion criteria, we obtained 30 included articles and 82 excluded articles.
It appeared that we could obtain a greater number of articles using SciVerse Scopus,
but the Scopus query results seemed not to follow the search criteria as strictly as the
WOS results (exclusion criteria in detail: 38 articles had a weak link to the competitive
JOSM advantage discussion, 25 articles did not address the manufacturing context, four items
26,3 were book chapters, ten items were conference papers, and two items were editorials
and lecture notes). The final results provided 58 individual articles (78 with duplicates)
once merged with the already collected articles.

3.3 Verifying the completeness of the literature set

402 In our literature sample, there were two systematic literature reviews focussing solely
on the servitization phenomenon (Lightfoot et al., 2013; Baines et al., 2009). In the most
recent review (Lightfoot et al., 2013), there is a section dedicated to identifying strategy-
related articles in the servitization stream. In order to verify the completeness of
our literature set, we compared the references of Lightfoot et al.’s review with our
results and complemented our literature set with ten additional strategy-related articles
not yet part of our review. Subsequently, we also added seven articles to correctly cite
specific research results, theories, or terms referred to in the included articles.
Finally, we identified the seminal articles that initially influenced the literature on
manufacturers’ service infusion and servitization to link our research to the origins
of the servitization phenomenon. Many of the initial articles are managerial-oriented
and use non-established terminology. These articles were not necessarily included in
the results of our strict search queries. Their inclusion was verified by analyzing which
titles the retrieved articles were citing when defining servitization and service infusion.
It became evident that three titles perceived by scholars as highly influential
(mentioned in the introduction parts of many articles) were not part of our current
literature sample. Those three missing articles (Oliva and Kallenberg, 2003;
Vandermerwe and Rada, 1988; Wise and Baumgartner, 1999) were added to our list
of “seminal articles.” We also complemented the list with the first article to rigorously
address the link between the construct of competitive advantage and the phenomenon
of servitization (Matthyssens, and Vandenbempt, 1998).
Including the seminal articles (four), articles matching the search criteria directly
(58), additional articles (from the existing literature review) (ten), and specific research/
theory/term references (seven), our data set was composed of 79 papers. Table II
presents these results.

3.4 Content analysis

Finally, the merged data set was analyzed to reveal the connections between service
infusion-related articles and the strategic concept of competitive advantage.
The analysis was carried out by reading the articles and finding references to the
primary constructs and strategic actions of the identified four theories on competitive
advantage or direct citations of the primary authors regarding the competitive
advantage theories. The constructs we looked for included: industry and offering
(market forces); resources and capabilities (RBV); capabilities that build competencies,
promoting strategic flexibility (dynamic capabilities); and relationships between actors
(relational view). The strategic actions we searched for were: positioning in industries
and differentiating the offering (market forces); controlling and protecting resources
and capabilities (RBV); developing and reconfiguring internal and external
competencies and resources to address rapidly changing environments (dynamic
capabilities); and leveraging idiosyncratic inter-firm linkages and sharing resources
(relational view). With regard to direct citations, we looked for articles that cited the
seminal authors of the four strategic discourses. After the analysis, we grouped
the papers into four corresponding categories, depending on the justification of service
infusion from a competitive advantage perspective: market forces, the RBV, dynamic Seeking
capabilities, and the relational view. Table III shows the results of this categorization. competitive
advantage
4. Service infusion with respect to strategic management
This section summarizes the service infusion literature’s different theoretical
approaches toward the concept of competitive advantage. We investigate theoretical
reasoning, gaps, and misconceptions in the service infusion literature with respect 403
to particular strategic approaches, enabling us to determine biases, legacy, and
potential development directions of the service infusion research.

4.1 Reflections on market forces

Although the recent strategy literature criticizes the market forces view because of the
lack of emphasis on dynamic market situations and entrepreneurial approaches,
the perspective has profoundly influenced the evolution of the service infusion
literature. Early contributions to the service infusion rationalized services as a reaction
(adaptation) to changing market situations (e.g. Vandermerwe and Rada, 1988). There
has been a transition toward perceiving services as tools that intervene and proactively
modify the markets (e.g. Gebauer et al., 2011). However, some concepts originating from
the market forces discourse remain in the discussion.
The strategy orientation of the service infusion research stream was introduced in
a pioneering paper by Vandermerwe and Rada (1988). The authors focussed on the
Porterian-based differentiation of service offerings and argued that firms seek
differentiation by changing their competitive dynamics to offer value-adding services
and extensive customer-focussed market packages or bundles. The unit of analysis
was the offering, and the services were perceived to facilitate firms’ repositioning
strategies and adaptation to the changing competitive environment (Vandermerwe and
Rada, 1988). Since the early years, the popularity of the market forces approach has
been gradually waning. However, the view still remains visible in some texts.
For example, Davies et al. (2007), in their distinction between systems’ sellers and
integrators, characterized a system’s seller as an actor using Porter-originated concepts
of vertical integration and bundling strategy. Similarly, Neely (2008) referred directly
to Porter (1980), noting that services are the optimal strategy for firms to address
the five competitive market forces. Continuing the industry architecture heritage,
Gebauer (2008) analyzed service strategies through an environment-strategy fit
and competitive position. Additionally, at the generic level, the Porter-originated term
“commoditization” also persists in the modern service infusion discussion
(e.g. Gebauer et al., 2010a; Nordin and Kowalkowski, 2010) as well as the strategy to
avoid “cost leadership.”
Many service infusion papers have combined, perhaps unintentionally, the market
forces approach with other strategic frameworks. For example, using non-Porterian
concepts, Löfberg et al. (2010) agreed that the firm’s competitive advantage relies on the
comparative advantage of its resources. However, the authors later reverted to
the market forces approach and analyzed supply chain strategies by prioritizing the
competitive position. Correspondingly, Eggert et al. (2011) expanded on the strategic
fit between the organization and the environment; although, at the same time, the
authors stated that services are developed through the combination of resources and
capabilities. However, there are also authors who have deliberately exploited
the combination of strategic approaches. For example, Matthyssens and Vandenbempt
JOSM Strategy
26,3 model Basic ideology Service rationale Representative research

Market The industry structure To differentiate and avoid Vandermerwe and Rada
forces determines and limits commoditization, firms need (1988), Gebauer (2008), Neely
strategic choices and any to create service offerings (2008)
404 available competitive that enhance the strategic fit
advantage between the external
environment and the
organization. With services,
a firm can capture its desired
market position and build
strategic barriers to
competition
Resource- Competitive interaction and Services promote the Oliva and Kallenberg (2003),
based entrepreneurial actions can identification and Fang et al., (2008), Gremyr
perspective be used to manipulate the development of valuable, et al. (2010), Ulaga and
market environment. The rare, inimitable, and Reinartz (2011)
competitive advantage lies organized resources (and
in the upstream and is based capabilities), thereby
on the organizations’ providing causal ambiguity
idiosyncratic and difficult- and social complexity. These
to-imitate resources resources include, for
example, installed bases,
service-enhanced
relationships, and unique
and complex product-service
offerings
Dynamic Competitive advantage There are two approaches: Hobday et al. (2005), Fischer
capabilities depends on a firm’s specific service-related et al. (2010), Den Hertog et al.
capabilities to adapt, capabilities provide a (2010), Gebauer (2011),
integrate, and reconfigure sustainable competitive Gebauer et al. (2012a),
skills, resources, and advantage, and specific Kindström et al. (2013)
functional competences in a capabilities are required to
dynamic environment organize service-related
resources to leverage the
competitive advantage
Relational Competitive advantage can The relationships in service Mathieu (2001b), Windahl
view be only gained through the or solution networks are and Lakemond (2006),
joint idiosyncratic sources of a sustainable Bastl et al. (2012), Hakanen
contributions of specific competitive advantage. Both and Jaakkola (2012), Gebauer
alliance partners and the customers and suppliers are et al. (2013), Kowalkowski
service ecosystem part of the service et al. (2013b), Spring and
ecosystem. Specific Araujo (2013)
capabilities are required for
initiating, maintaining, and
capitalizing on these
Table III. relationships, as well as
Summary of the value constellations and
service infusion complementarities in the
literature network
(1998) formed a model that connected market forces and resource-based approaches Seeking
and emphasized the dynamic interplay between them. competitive
In summary, the service infusion literature originated from the competitive forces
theory, in which the environment is a strategy-guiding principle, and the offering is
advantage
the primary unit of analysis. However, the authors have rarely analyzed the service
infusion phenomenon solely from the perspective of industry architecture. They have,
intentionally and unintentionally, reflected and combined other strategic viewpoints as 405
well. Over the years, the direction of the service infusion research stream has, however,
been diverging from industry architecture approaches toward modern strategic
management theories.

4.2 RBV approaches

The RBV is the most popular strategic perspective on service infusion.
This perspective considers service business a method to redefine the industry
structure (Gebauer et al., 2011). Competitive advantage originates in resources that are
valuable, inimitable, rare, and organized (to deliver their advantageous features)
(Barney, 1995; Barney, 1991). The interest in this approach has been explained by the
growing difference between the stocks of relevant resources in product-oriented and
service firms (Bharadwaj et al., 1993). Additionally, service offerings have been
perceived as less vulnerable to imitation (Smith, 2013; Visnjic Kastalli et al., 2013;
Salonen, 2011; Turunen and Toivonen, 2011; Oliva and Kallenberg, 2003) although
contrary views exist (Antioco et al., 2008). Moreover, because service orientation is seen
as a possible provider of totally new VRIO resources, the studies are also concerned
with resource development during the manufacturer’s transition toward services.
Based on our analysis, resource-based argumentation in the service infusion
literature is concerned with resources matching the VRIO characteristics. Scholars
have identified three core resources: installed base (e.g. Ulaga and Reinartz, 2011; Oliva
and Kallenberg, 2003; Wise and Baumgartner, 1999), unique and complex offerings
(e.g. Ulaga and Reinartz, 2011; Gremyr et al., 2010), and service-enhanced relationships
(e.g. Nordin and Kowalkowski, 2010; Davies et al., 2007; Tuli et al., 2007). Additionally,
“service culture” is mentioned in identification (Gebauer et al., 2010a). Since
Matthyssens and Vandenbempt (1998) and Oliva and Kallenberg (2003), researchers
have also identified the unique capabilities related to service infusion (e.g. Storbacka,
2011; Gebauer, 2007) and the role of complex resource-capability combinations in
preventing imitation (Oliveira and Roth, 2012). Next, we discuss in detail the identified
resources and related capabilities.
The role of the installed base with respect to competitive advantage has been
recognized since Wise and Baumgartner (1999). The primary argument is that the
installed base provides the manufacturer with a knowledge-driven resource (Oliva and
Kallenberg, 2003), enabling the manufacturer to understand the product and the customer
better than competitors. The possibilities of collecting usage data and information on
customer processes provide manufacturers with unique insights that remain immobile
and controllable (Ulaga and Reinartz, 2011). Especially when performance-based contracts
are used, the service provider becomes closely integrated with the customer’s operation
and obtains first-hand information (Hypko et al., 2010). Data collection and information-
processing capabilities (Kowalkowski et al., 2013a; Kim et al., 2010; Neely, 2008)
allow companies to gather and analyze data to organize resources. Manufacturers
also protect the immobility of the gained benefits with designs, prohibiting competitors
from servicing the installed base (Ulaga and Reinartz, 2011).
JOSM The literature also recognizes complex, interconnected, product-service
26,3 offerings as a VRIO resource. Investment in R&D provides detailed insights into
products by companies, providing a complex system that combines products,
services, resources, and capabilities (Ulaga and Reinartz, 2011; Gremyr et al., 2010).
The authors view the systems as unique combinations of firms’ products, services,
and solutions made possible by detailed insights into the company’s offerings
406 and customers. This phenomenon is explained by knowledge and resource
spillovers between product and service operations (Fang et al., 2008). According
to RBV terminology, both explanations are manifestations of interconnected
resources and skill stocks leading to complexity and causal ambiguity of resource
endowments.
Authors reflecting on the resource-based approach emphasize the importance of
service-enhanced relationships among suppliers, customers, and networks. This notion
is mostly present in solution-related papers (Gremyr et al., 2010; Matthyssens and
Vandenbempt, 2010; Nordin and Kowalkowski, 2010; Matthyssens and Vandenbempt,
2008; Davies et al., 2007; Tuli et al., 2007; Windahl and Lakemond, 2006; Davies, 2004).
The common denominator in solution approaches is “the close and collaborative modus
operandi” (Nordin and Kowalkowski, 2010, pp. 450). Entering into co-operation with the
customer, organizing in a customer-focussed way, involving the network of actors
working with solutions, and producing customer-oriented results can provide a
competitive advantage (Gebauer et al., 2010b; Nordin and Kowalkowski, 2010).
The literature has identified many requirements for this development, for example, the
interplay between supplier and customer and other stakeholders must be orchestrated
with special capabilities (Kohtamäki et al., 2013b; Paiola et al., 2013; Davies et al., 2007;
Windahl and Lakemond, 2006). Additionally, the formation of organized value
constellations should be facilitated, in which effective information sharing and
adjusting the visibility line has a significant role (Holmström et al., 2010). Raddats and
Easingwood (2010) elaborated on these constructs with their concept of a
“multi-vendor” orientation, moving the unit of analysis beyond the supplier-customer
dyad. Following the RBV, this produces socially complex VRIO resources
(Barney, 1995; Barney, 1991).
Recent research reports on customer solutions as being vulnerable to imitation
(Biggemann et al., 2013). This emphasizes the role of iterative, interactive, and relational
processes – with complex and case-specific implementations (Tuli et al., 2007) and
favorable identity and reputation (Gebauer et al., 2006). The effective management of
complex relationship structures, and firm positions within them, provides competitive
advantage – not just protection of dyadic customer relationships and customer
information. With these developments, RBV and solution-related service infusion
discussions are extended beyond the “traditional” resource-based strategies and
toward the “extensions” of RBV (e.g. resource-advantage theory (Hunt, 1997;
as mentioned by Raddats and Easingwood, 2010) and the relational view of strategy
(discussed later in this paper).
In summary, the resource-based studies in the service infusion literature primarily
discuss identifying resources and capabilities and controlling them to foster their
inimitability and immobility. Barriers to imitation are becoming greater as offerings
shift from product orientation toward supporting customer processes (Mathieu, 2001a).
However, although the subject has gained attention in recent years, the literature is
scarce on empirical proof that services, as a resource, provides financial value (Dachs
et al., 2014; Kohtamäki et al., 2013b; Visnjic Kastalli and Van Looy, 2013; Neely, 2008).
4.3 Research expanding on the dynamic capabilities perspective Seeking
Substantial research addresses the capabilities required in shifting to a service competitive
orientation. A comparison of the strategic origins of capability-based contributions
to competitive advantage requires identifying articles that reflect a primarily
advantage
dynamic capabilities approach, and those associating themselves with the RBV. The
distinction suggested by Gebauer (2011), Gebauer et al. (2013), Spring and Araujo
(2009), and Visnjic Kastalli and Van Looy (2013) divides capabilities into operational 407
and dynamic. Operational capabilities range from service delivery to sales, whereas
dynamic capabilities include enabling service deployment; that is, service
management and organizing the product-service transition of the firm (Visnjic
Kastalli and Van Looy, 2013). However, the vagueness of the terminology renders
the distinction indiscernible in some articles. Therefore, this literature review adopts
an additional criterion: an article only qualifies for the dynamic capabilities
“category” if it clearly refers to dynamic capabilities as a strategic management
construct (i.e. the authors argue that dynamic capabilities enable the transition to
service orientation and claim that static RBV alone cannot address servitization
challenges).
Fang et al. (2008) viewed service transition as a process of leveraging the firm’s
products and resources for specific customer applications as service extensions. The
role of core (dynamic) capabilities is to organize the resources. The firm will not gain
a competitive edge until its core capabilities are developed. Hobday et al. (2005,
pp. 1110) adhered to the resource-capability connection yet initiated capability-driven
argumentation. The authors argued that systems integration represents “an empirical
instantiation of [a] firm’s dynamic capabilities” providing a source of sustainable
competitive advantage. Systems integration enables a company to shape its boundaries
and flexibly decide “who to compete with, who to collaborate with, what to make
in-house and what to outsource.”
Contributions to the dynamic capabilities largely include service innovation and
development-related endeavors. Fischer et al. (2010) elaborated on the consequences
of explorative and exploitative (dynamic) capabilities in the context of service
innovation. This research revealed that exploitative dynamic capabilities prioritize
existing knowledge and conservative movements along the product-service transition
line, whereas explorative dynamic capabilities allow companies to explore
beyond existing assumptions. The research suggests that company performance
benefits from simultaneous exploitation and exploration; that is, ambidexterity
(March, 1991) in a service setting.
Continuing in the field of service innovation, Den Hertog et al. (2010) authored one of
the first papers to apply dynamic capabilities as a comprehensive framework for
managing service infusion-enabled competitive advantage. The suggested six dynamic
service innovation capabilities emphasize user needs and technological options in
addition to conceptualizing, bundling, co-producing, orchestrating, scaling, stretching,
learning, and adapting. Gebauer (2011) endorsed this view by stating that servitizing
manufacturers attempt to “achieve competitive advantages by challenging and
modifying their sensing, seizing, and reconfiguring capabilities” (pp. 1249). Moreover,
Kindström et al. (2013) used empirical data to further develop the dynamic capability-
based framework. They moved closer to the actual strategic management terminology
and identified pre-requisites of service innovation: to sense (new approaches to
opportunity discovery), seize (capitalize on service innovation opportunities),
and reconfigure (shift the competitive arena).
JOSM To conclude, a capabilities-based approach to servitization is prominent in the
26,3 service infusion literature, but direct links to actual dynamic capabilities literature are
often imprecise – with the exception of the work of Kindström et al. (2013), Gebauer
(2011), and Den Hertog et al. (2010). The authors refer to capabilities as potential
sources of sustainable competitive advantage; however, despite few exceptions,
relatively weak linkages to the ontology of dynamic capability theory hinder
408 an extensive conceptual analysis in the service infusion context. Therefore, we agree
with Gebauer et al. (2012a), who posit that service infusion research would benefit from
a rigorous connection to the dynamic capabilities approach and elaboration of
capability-driven competitive advantage.

4.4 Relational view endeavors

The relational view research in the service infusion literature often combines analyses
of service infusion-related dynamic capabilities. However, in most recent studies, these
lines of thought diverge and form independent and even differing chains of
argumentation. The relational view is anecdotally reflected in the early phases of the
service infusion research: Mathieu (2001b) referred to the “collaborative option”
for implementing service strategy, suggesting partnerships with potential competitors.
The paper presented four potential benefits of this option that outweigh the risks
associated with co-opetition: access to resources and skills, innovativeness,
imaginativeness, and political cost moderation. Mathieu (2001b) applied these
concepts to facilitate relational approaches to service infusion although it was some
time before these perspectives became popular.
The relational view has recently been reflected from the dynamic capability
perspective. Spring and Araujo (2009) recognized the importance of intra-firm and
inter-firm capabilities as well as complementarity between firms. Den Hertog et al.
(2010) offered a conceptual framework for service development by proposing
six dynamic service innovation capabilities, one of which was “co-producing and
orchestrating.” These capabilities are significant with respect to open innovation
(Sisodiya et al., 2013; Chesbrough, 2011). Furthermore, Kohtamäki et al. (2013a) argued
that specific network capabilities are required to develop and utilize inter-
organizational relationships in service innovation contexts. Kohtamäki et al. (2013b)
also combined the literature on network orchestration and service infusion to identify
three categories of capabilities: network management, network integration,
and network learning. These arguments are consistent with Spring and Araujo
(2013), who, building on the “service factory” concept of Chase and Garvin (1989),
emphasized the importance of capabilities that enable the firm to act with, instead of
acting in response to, the firms in its network.
Gebauer et al. (2013) approached the theme of the capabilities-driven relational view
from a slightly different perspective. The authors focussed on inter-firm network
structures and created a link between the network-oriented dynamic capabilities
approach and the service networks perspective (Henneberg et al., 2013). Four types
of service networks were identified with an explorative study: a vertical after-sales
network, a life cycle services network, a horizontal outsourcing network, and an
integration service network. The solution service components define a preferred
network form. Proceeding with the service networks perspective, Bastl et al. (2012)
made a direct contribution to the relational view of strategy, stating that relationship
structures provide a competitive advantage because they are a source of above-normal
firm returns. The study analyzed and identified many different dimensions of the
relationship, calling for an inter-disciplinary approach toward networked service Seeking
infusion. In abstract terms, the message was that the relational view requires competitive
a balanced approach using many theoretical streams.
The relational view has also been approached from the service offering perspective,
advantage
particularly in the discussions concerning integrated solutions. Windahl and
Lakemond (2006) established a basis for this work reflecting on the concept of an
integrated solution to the relational view. They recognized six factors in solution 409
development: “the strength of the relationships between the different actors involved in
the project,” “the firm’s position in the network,” “the firm’s network horizon,”
“the solution’s impact on existing internal activities,” “the solution’s impact on the
customers’ core processes” and “external determinants.” The authors clearly view
the integrated solution more broadly than scholars that utilized the resource-based and
capability-oriented approaches. This view was complemented by Hakanen and
Jaakkola (2012), who investigated co-creation in solution networks. Their findings
revealed the importance of the customer’s participation preferences, the extent of
network competition, role division, and rapport between the actors in the networked
setting. An definitive link between integrated solutions and the relational view of
strategy was made by Spring and Araujo (2013) who, expanding on Windahl and
Lakemond (2006) and Davies et al. (2007), examined manufacturing firms’ generation of
new, product-related services using their own and other firms’ resources. This creates
intertwining of actors’ business models and creates a need to seek reciprocal external
fit between the suppliers, customers, and providers (Ferreira et al., 2013; Li, 2011).
Finally, Kowalkowski et al. (2013b) viewed servitization from the perspective of inter-
firm networks. The authors examined service infusion and its value-creation logic through
networks. They analyzed the phenomenon in a small and medium-size enterprise context,
in which firms could not rely solely on their own resources and capabilities because of
their size. Instead, the actors formed value constellations with each other and developed
a competitive advantage based on their relational resources. These results both exhibit
a link to the relational view and offer a potential context for further research. Moreover,
the use of value constellation as a unit of analysis closes the gap between the service
infusion and service systems literature (Maglio and Spohrer, 2008), and forms a link with
the service-dominant logic of marketing (Vargo and Lusch, 2004, 2008).
To conclude, research on service infusion from a relational perspective is in its early
stages, a consensus on the relational approach has not been reached, and the
phenomena have been addressed from different, independent viewpoints.
The literature on solution networks and value constellations, however, has already
shown that the relational view provides new perspectives to service infusion.
The greatest unknown in the relational approach to service infusion lies in the
operations management field (Bikfalvi et al., 2013). This is of relevance as it appears
that competitive advantage can emerge from co-creation between network actors
(Barquet et al., 2013). Interestingly, it may also be that the actors can share competitive
advantage (Chen et al., 2011).

5. Key findings and implications

The service infusion research has gradually evolved in terms of how the transition
from goods orientation to service orientation is justified from a competitive advantage
perspective. Common across the service infusion literature is the view that services
bring competitive advantage for the manufacturer. However, the answer to the
question of how competitive advantage is created has evolved gradually, matured,
JOSM and gained detail. Anchored in our literature review, we will now present the five main
26,3 findings revealed by the analysis.

5.1 A lag in reflections on the strategic management discussion

The discussion about acquiring a service infusion-related competitive advantage has
410 closely followed the paths created by strategic management scholars, who, in recent
decades, have tried to thoroughly explore the sources of competitive advantage and its
sustainability (e.g. D’Aveni et al., 2010; Teece, 2007; Dyer and Singh, 1998; Teece et al.,
1997; Barney, 1991; Eisenhardt, 1989; Rumelt, 1984; Wernerfelt, 1984; Porter, 1980).
Removed from the temporal context, this finding seems obvious. What makes the
finding interesting is that the service infusion literature lags behind the discussion on
strategic management by approximately ten to 15 years.
The earliest contributions (in the early 2000s) to service infusion saw service
business as the manufacturer’s answer to the evolving industry structure and
architecture. This ideology is based on the competitive market forces and industry
structure approach that was used in the strategy literature more than 15 years earlier
(Utterback and Suárez, 1993; Porter, 1980). This view is interested in how firms choose
a favorable competitive position and defend it from competition. The seminal authors
on service infusion, e.g. Vandermerwe and Rada (1988), adhered to this approach and
argued that firms seek differentiation by introducing value-adding services to products
and forming customer-focussed market packages or bundles.
During the 2000s, interest moved toward firms’ abilities to change the markets
with their service-related resources and capabilities (e.g. Ulaga and Reinartz, 2011;
Gremyr et al., 2010; Fang et al., 2008; Oliva and Kallenberg, 2003). This view
originated in the resource-based approach discussed ten years earlier (Barney, 1991;
Rumelt, 1984; Wernerfelt, 1984), arguing that differences between firms were
primarily caused by the heterogeneity of their resources and capabilities.
Furthermore, in line with the strategic management literature, because of criticism
about the boundary of the firm, the stream broadened its views to include shared
resources and new resource combinations between the firms (e.g. Eisenhardt and
Martin, 2000). However, the majority of the contributions were still primarily
concerned with a single firm’s actions in developing its resources.
The most recent service infusion research (especially from 2010 onward) shifted the
focus of the discussion on competitive advantage toward dynamic capabilities
(established in the strategy discussion during the late 1990s and early 2000s).
There are a considerable number of contributions in the service infusion literature
elaborating on the dynamic capabilities approach (e.g. Kindström et al., 2013;
Gebauer et al., 2012a; Gebauer, 2011; Den Hertog et al., 2010; Fischer et al., 2010; Hobday
et al., 2005). Furthermore, service infusion scholars have also adhered to the later
views of this strategy stream, focussing on the role of system perspectives and
emphasizing the connections between the firm and the broader ecosystem (e.g. Vickery
et al., 2013; Adner and Kapoor, 2010; Lichtenthaler and Lichtenthaler, 2009; Teece, 2007;
Iansiti and Levien, 2004; Moore, 1993). The authors have examined the competitive
advantage gained from new, value-enhancing combinations of actors (Gebauer
et al., 2013; Kowalkowski et al., 2013b; Spring and Araujo, 2013; Bastl et al., 2012;
Hakanen and Jaakkola, 2012; Windahl and Lakemond, 2006; Mathieu, 2001b).
Thus, the servitization stream seems to be evolving toward the firm’s service-related
dynamic capabilities and the so-called “relational view” of (e.g. Jacobides et al., 2006;
Lorenzoni and Lipparini, 1999; Dyer and Singh, 1998). However, servitization writings Seeking
seldom reflect the more recent nuances especially regarding a relational view (Dyer et competitive
al., 2008; Lavie, 2006). This gap may inhibit the development of the literature in this
area of study.
advantage

5.2 Vague justification of competitive advantage

By taking extant strategic management theories as a starting point, we described the 411
diversity of opinions concerning the sources of competitive advantage in service-
infusion contexts. However, in many cases, we found conflicting arguments regarding
strategic management constructs. These were evident in the earliest contributions,
in which industry architecture and resource-based strategies were in some cases mixed
(Eggert et al., 2011; Löfberg et al., 2010). In resource-based contributions, the RBV and
dynamic capabilities were sometimes combined (e.g. Fang et al., 2008). Furthermore,
many service infusion studies elaborated on dynamic capability and on the relational
view constructs at the same time, without making a clear distinction (e.g. Gebauer et al.,
2013; Kohtamäki et al., 2013b; Kowalkowski et al., 2013b; Den Hertog et al., 2010;
Spring and Araujo, 2009; Windahl and Lakemond, 2006).
We perceive that the reason for the inaccuracies in theoretical anchoring is that
neither the constructs nor the linkages were defined precisely in many service infusion
articles. The papers overlap with regard to the views of strategy, and texts must be
viewed through “several strategic lenses.” In addition, our analysis revealed the specific
concern that although many service infusion studies chose a strategic management
theory as a starting point, they did not justify their choice or the benefits and
limitations caused by it (e.g. a RBV may cause issues in analyzing resources outside
firm boundaries).
These findings point to a significant problem in the service infusion research, that is,
an inaccurate link to the management strategy literature. Fortunately, many articles
have made clear connections to strategic management viewpoints. These studies have
advanced the research substantially, as we have shown in this study. However,
the studies that are not so precise in defining the constructs as a basis for theorizing
have already lead to certain biases in the field. Two of these biases are found in this
study: the single firm and technology dominance. However, there might also be other
yet to be identified misconceptions in the servitization literature. Rigorous analysis of
the usage of strategic management constructs should therefore be performed when
developing new contributions to the servitization discourse.

5.3 From single organizations to inter-firm networks

One of the key biases that this research was able to uncover was the single firm
dominant view to service infusion. The research has, fortunately, gradually moved
toward more holistic approaches. However, especially in the beginning, service
infusion-related competitive advantage was discussed mainly in the intra-firm context
(e.g. Oliva and Kallenberg, 2003). Services were viewed from a perspective in which
the firm infusing service was the most interesting entity. The assumption was that with
an enhanced offering, the firm could fight the commoditization of product-based
business. The research relied heavily on offering-related questions, such as how
services increased the competitive advantage of the product base (e.g. Mathieu, 2001a).
At this stage, much research has been done on understanding and conceptualizing
the different types of service concepts that manufacturers could offer. However, it was soon
JOSM recognized that services were not only add-ons to products but also require a comprehensive
26,3 understanding of their management and organization (Turunen and Toivonen, 2011) – the
interest shifted from single services to organizations (e.g. Gebauer et al., 2010a, b).
In the 2000s, the service infusion literature moved from the firm’s service offering
management to the ability to change markets through service-related resources
(Gebauer et al., 2011). This mode of thought quickly led to questions concerning the
412 alignment of the service offerings with the external environment. The competitive
advantage was seen as originating not only from the firm’s actions but also from the
service-enabled relationships with the customers and suppliers. This changed the unit
of analysis to a dyadic relationship (Matthyssens and Vandenbempt, 2010, Nordin and
Kowalkowski, 2010; Tuli et al., 2007; Windahl and Lakemond 2006). The concept
of “solution” became a popular complement to the general term “service” and, in some
texts, even replaced it. The analysis of the solution-oriented approach suggested that it
could tighten relationships between the supplier and customer, and even form mutual
relational processes, such as in the case of developing high-level services.
In the most recent research, the unit of analysis has widened to networks of actors
(e.g. Gebauer et al., 2013; Kowalkowski et al., 2013b; Spring and Araujo, 2013; Hakanen
and Jaakkola, 2012). The research has suggested that the co-creation of value with
services requires value co-creation systems that interact at different levels of networks
and supply chains (Lay et al., 2010). In this view, firms require a new set of dynamic
capabilities in orchestrating capability-resource combinations that are only available in
inter-firm networks (e.g. Kowalkowski et al., 2013b; Spring and Araujo, 2013; Li, 2011).
The dyadic perspective no longer is sufficient to explain the possibility of co-creating
value at different interaction levels.
When the level of analysis is raised to the “service system perspective,” our
argument is that companies must consider how this complex network of resources,
people, products, capabilities, and relationships could be leveraged. With this approach,
the effectively organized network is seen as the primary source of competitive
advantage. The major gap in the knowledge of the network approach to service
infusion appears to lie in orchestration and operations management of the
service networks (Bikfalvi et al., 2013). Further studies are needed to understand and
develop the interactions among different players (cf. Spring and Araujo, 2013). In this
setting, the primary question is not who creates value but how the system creates value
to benefit all its members. According to the findings, we argue that in the service
networks, it seems that the key to sustaining competitive advantage lies in addressing
five key challenges: capturing value from complex networked operations, understanding
and developing the value-based exchange in many-to-many relationships, making
new offerings possible by facilitating the formation of inter-firm value constellations and
managing complementarities, managing flexible governance methods to facilitate agility
and prevent opportunism (especially in informal and unsigned situations) and
determining which service infusion-related resources and capabilities are kept in house
and which are acquired from the network.

5.4 From technology orientation to socio-technical systems

This study also found another bias in the research field developments. The resources,
having the most strategic importance, have been mostly connected to products and
technology (e.g. installed base, product information, and technological expertise)
(e.g. Ulaga and Reinartz, 2011; Kim et al., 2010; Neely, 2008; Oliva and Kallenberg, 2003).
Identifying technology-related resources is well known in the service infusion stream
(Ulaga and Reinartz, 2011; Kim et al., 2010; Neely, 2008; Oliva and Kallenberg, 2003), Seeking
and there are attractive methods with which the company can try to protect them competitive
(Ulaga and Reinartz, 2011). The problem, however, with this approach is that the
strategic management stream has challenged the sustainability of the competitive
advantage
advantage gained via technology-based solutions and their protection (Eisenhardt and
Martin, 2000; Thomas, 1996). This implies that the approaches that servitizing
companies are using are vulnerable for competitive attacks. According to our analysis, 413
the bias of the service infusion research is an evident result of the empirical context of
the field: technology-oriented manufacturing firms (Lightfoot et al., 2013; Baines et al.,
2009). However, we argue that the lack of clarity regarding strategic management
theories (as described earlier), and especially the dominance of the RBV, which
specifically aims to build resource position barriers (Barney, 1991), has made this bias
even stronger.
According to our findings, research that privileges the role of technology in solutions
has been decreasing for some time. Servitization scholars have been moving toward
a systemic perspective in service network research, that is, agreeing that service networks
include many different actors – technical and non-technical – connected with each other
through direct and indirect relationships (Henneberg et al., 2013; Kowalkowski et al.,
2013b; Maglio and Spohrer, 2008). However, these approaches seem to apply only to
more advanced service offerings. The dominant approaches toward servitization,
which emphasize the transition from basic services to more advanced ones (Baines
et al., 2009), still maintain that technology orientation is the primary building block
for servitization.
Based on the findings of this study, our argument is that the service infusion
scholars should favor the relational view to strategy (instead of RBV) already when acting
on the basic service level. We argue that by taking the relational view as a starting point,
the servitizing companies could gain competitive advantage primarily by leveraging the
inherent relationship complexity of their service networks. This would enable these
companies to move away from the protection of technology-related assets, and focus
directly on the relational aspects that are essential in creating value-adding processes in
service contexts (Turunen and Toivonen, 2011; Brax and Jonsson, 2009).

5.5 Addressing challenges to the sustainability of competitive advantage

Closely related to the technology discussion in the previous paragraph, our fifth main
finding is that the service infusion research papers do not widely reflect the strategic
management discourse on shortening timespans of sustainability with regards to
competitive advantage. Already for some time, the strategy literature has recognized
that especially in so-called high-velocity (e.g. Eisenhardt, 1989) or hypercompetitive
(e.g. D’Aveni, 2010) environments, the sources of competitive advantage can only be
protected for limited timespans, and these firms must rely on agility. For coping with
these settings, the strategic management literature prescribes a strategic flexibility
approach (e.g. Sanchez, 1995; Garud and Kotha, 1994). According to the
hypercompetition writings, the relationship orientation as such does not provide
competitive advantage – actually, forming relationships may escalate
hypercompetition. However, the relationships can be leveraged to foster strategic
flexibility (D’Aveni, 2010, p. 338).
The service infusion scholars have recently moved their interest toward these
challenges. The approaches are primarily done through reflecting the dynamic capabilities
JOSM view to strategy (Kindström et al., 2013; Gebauer, 2011; Den Hertog et al., 2010), and there
26,3 seems to be clear interest to proceed along this line (Gebauer et al., 2012a, b).
Also Kowalkowski et al.’s (2012) work on agile incrementalism directly addresses the
challenges of the hypercompetition. We argue that this area should receive greater
attention in the future. The rapid pace of technological development and digitalization
(Brynjolfsson and McAfee, 2012) may render the competition in manufacturers’ service
414 business so dynamic that competitive equilibrium-based strategic management
approaches (such as strategies based on building resource position barriers) may no
longer work.

6. Concluding discussion
We have systematically analyzed the service infusion literature and clarified its
reflections on the strategic management literature. We have exposed the foundations
on which the service infusion discourse has developed its justifications of servitization
as a means of gaining and sustaining competitive advantage. The analysis revealed
that although the strategic origins of service infusion are based on the industry
architecture approach (e.g. Vandermerwe and Rada, 1988), the resource-based
perspectives have provided the predominant basis for the majority of the service
infusion literature discussions (e.g. Ulaga and Reinartz, 2011; Gremyr et al., 2010; Fang
et al., 2008; Oliva and Kallenberg, 2003). Our analysis of the relevant literature revealed
a clear movement toward the dynamic capabilities (e.g. Kindström et al., 2013; Gebauer
et al., 2012a; Gebauer, 2011; Den Hertog et al., 2010; Fischer et al., 2010; Hobday et al.,
2005) and relational view of strategy (Gebauer et al., 2013; Kowalkowski et al., 2013b;
Spring and Araujo, 2013; Bastl et al., 2012; Hakanen and Jaakkola, 2012; Windahl and
Lakemond, 2006; Mathieu, 2001b). We reported in detail on how competitive advantage
in many recent studies originates from complex networks of actors (firms, people, and
technological machinery), systems, and structures.
Our analysis also revealed a lack of clarity in terms of theoretical linkages between
service infusion and strategic management literature. This may have created two major
misconceptions in the field. First, many contributions have offered insights
predominantly from the perspective of a strong focal company (e.g. integrator) and
its customers and suppliers (Gebauer et al., 2011; Matthyssens and Vandenbempt, 2010;
Nordin and Kowalkowski, 2010; Tuli et al., 2007; Windahl and Lakemond, 2006; Oliva
and Kallenberg, 2003; Mathieu, 2001a). We believe that systemic approaches and
combining a larger set of actors in agile ways could yield more useful findings.
The effectively organized network could thereby be leveraged as the primary source of
competitive advantage. The importance of this development has been heightened due
to digitalization, as it has facilitated the formation of highly specialized and rapidly
changing firm networks (Yoo et al., 2012). Therefore, we argue that researchers should
adopt service networks as a predominant construct when analyzing servitization.
The diversity of different relationships in networks should be thoroughly elaborated,
especially from complex many-to-many perspectives.
Second, existing contributions to service infusion research suffer from contextual
biases related to an over-emphasis of technology (e.g. Ulaga and Reinartz, 2011; Kim
et al., 2010; Neely, 2008). Technology-based service offerings are widely perceived as
the mandatory first step for more advanced services (Baines et al., 2009). We argue that
service infusion scholars should adhere to the relational view approach to strategy by
leveraging the complex service network in their ecosystems, as well as going beyond
customer’s organization boundaries. In other words, the service would not be targeted
only to the technological installed base, but for the whole socio-technical system Seeking
involved in customer’s business. competitive
Our findings also highlight a dearth of service infusion discussion regarding the
potential transience of competitive advantage (e.g. D’Aveni, 2010; Eisenhardt, 1989).
advantage
By building longer-term relationships with customers, suppliers, and third parties,
manufacturers are trying to fight back and preserve longer-term competitive
advantage. However, the hypercompetition literature maintains that a service business 415
by definition cannot provide an antidote for dynamic competition (D’Aveni, 2010,
p. 338), but instead argue the focus should be in promoting continuous change: sensing
the possibilities, seizing them and reconfiguring the existing resources to support the
change (e.g. Teece, 2007). What makes this issue complex is that the manufacturing
sector seems rather slow to embrace change, thus adoption of agile ways of working is
challenging (Kowalkowski et al., 2012). Therefore, we suggest that this area should be
of utmost importance in future servitization research. The dynamic capability theory
offers a solid background for this work. In addition, researchers could further
investigate novel ways of addressing the dynamic competition – e.g. sharing the
competitive advantage between many actors in the networks (Chen et al., 2011).
These avenues might also offer contributions to the strategy discourse.
In this review, we presented many theories and insights concerning the direction of
future research on service-infusion. To summarize, we perceive that the growing trends
of social networks, co-specialization, actor dependency and shared resources offer
productive avenues for research. Interesting topics include network-related and
relational capabilities, co-opetition, open business models, and relational rent
extraction. By definition, the unit of analysis in these avenues should be
predominantly networks of firms or business ecosystems, not single organizations
or even dyadic relationships. Furthermore, the recognition that networked business
models form relational processes might also resolve some concerns related to service
business profitability and difficulties in broadening capability requirements.
In order to avoid contextual biases, we also encourage research that combines data
from other settings than just manufacturing. To facilitate and also leverage these
developments, valuable results related to one industry could be applied to another,
especially from information technology services to the manufacturing sector.
Digitalization is a strong driver of these combinations (e.g. Brynjolfsson and McAfee,
2012; Yoo et al., 2012). Regarding methodological designs of future studies, we adhere to
the common view that empirical and even explorative service infusion research would
benefit from rigorous quantitative approaches. This has already been done in studies
elaborating the profitability results of different service infusion strategies and
quantitatively addressing the phenomenon of the service paradox (Dachs et al., 2014;
Visnjic Kastalli and Van Looy, 2013; Kohtamäki et al., 2013b; Neely, 2008). However, as our
literature analysis showed, also qualitative and explorative research can tighten the link
between the literature streams of strategic management and service infusion – and reduce
the lag between strategic management development and service infusion reflections.
To conclude, the service infusion scholars’ path in elaborating the sources of service-
driven competitive advantage has been long but necessary. Consequently, service
infusion is now considered through well-elaborated strategic argumentation.
The evolution of this field has ensured that service infusion is not attached to a
specific strategic perspective but to general views of the firm seeking to account for
competitive advantage. We hope to enhance the structure of the discussion with this
study. In addition, we anticipate that empirically driven research on service infusion
JOSM could contribute to the more theoretical discussion of strategy if the contextual
26,3 variables and constructs are validated and extended. Hence, future research in the
service infusion field should further focus on determining the reasons for a firm’s
success in gaining competitive advantage – as well as why the success of some firms is
only temporary.

416 Acknowledgement
This research was conducted in the Future Industrial Services (FutIS) research
program, managed by the Finnish Metals and Engineering Competence Cluster
(FIMECC), and funded by the Finnish Funding Agency for Technology and Innovation
(TEKES), research institutes and companies involved. Their support is gratefully
acknowledged. The authors would also like to show the gratitude to Cambridge Service
Alliance for support and guidance.

Note
1. The terms service infusion, servitization, service transition, service-driven manufacturing,
and development of product-service systems are used by different authors to refer to the
same concept. This paper uses the terms service infusion and servitization interchangeably.

References
Adner, R. and Kapoor, R. (2010), “Value creation in innovation ecosystems: how the structure of
technological interdependence affects firm performance in new technology generations”,
Strategic Management Journal, Vol. 31 No. 3, pp. 306-333.
Amit, R. and Schoemaker, P. (1993), “Strategic assets and organizational rent”, Strategic
Management Journal, Vol. 14 No. 1, pp. 33-46.
Antioco, M., Moenaert, R.K., Lindgreen, A. and Wetzels, M.G.M. (2008), “Organizational
antecedents to and consequences of service business orientations in manufacturing
companies”, Journal of the Academy of Marketing Science, Vol. 36 No. 3, pp. 337-358.
Axelrod, R. and Hamilton, W.D. (1981), “The evolution of cooperation”, Science, Vol. 211 No. 4489,
pp. 1390-1396.
Baines, T., Lightfoot, H., Benedettini, O. and Kay, J.M. (2009), “The servitization of manufacturing:
a review of literature and reflection on future challenges”, Journal of Manufacturing
Technology Management, Vol. 20 No. 5, pp. 547-567.
Barney, J. (1991), “Firm resources and sustained competitive advantage”, Journal of Management,
Vol. 17 No. 1, pp. 99-120.
Barney, J. (1995), “Looking inside for competitive advantage”, The Academy of Management
Executive, Vol. 9 No. 4, pp. 49-61.
Barney, J.R. (1986), “Strategic factor markets: expectations, luck and business strategy”,
Management Science, Vol. 32 No. 10, pp. 1231-1241.
Barquet, A.P.B., de Oliveira, M.G., Amigo, C.R.R., Cunha, V.P. and Rozenfeld, H. (2013),
“Employing the business model concept to support the adoption of product-service
systems (PSS)”, Industrial Marketing Management, Vol. 42 No. 5, pp. 693-704.
Barreto, I. (2010), “Dynamic capabilities: a review of past research and an agenda for the future”,
Journal of Management, Vol. 36 No. 1, pp. 256-280.
Bastl, M., Johnson, M., Lightfoot, H. and Evans, S. (2012), “Buyer-supplier relationships in a
servitized environment: an examination with Cannon and Perreault’s framework”,
International Journal of Operations and Production Management, Vol. 32 No. 6, pp. 650-675.
Bernroider, E.W.N., Wong, C.W.Y. and Lai, K. (2014), “From dynamic capabilities to ERP enabled Seeking
business improvements: the mediating effect of the implementation project”, International
Journal of Project Management, Vol. 32 No. 2, pp. 350-362.
competitive
Bharadwaj, S., Rajan, V. and Fahy, J. (1993), “Sustainable competitive advantage in service
advantage
industries: a conceptual model and research propositions”, The Journal of Marketing,
Vol. 57 No. 4, pp. 83-99.
Biggemann, S., Kowalkowski, C., Maley, J. and Brege, S. (2013), “Development and 417
implementation of customer solutions: a study of process dynamics and market
shaping”, Industrial Marketing Management, Vol. 42 No. 7, pp. 1083-1092.
Bikfalvi, A., Lay, G., Maloca, S. and Waser, B.R. (2013), “Servitization and networking:
large-scale survey findings on product-related services”, Service Business, Vol. 7 No. 1,
pp. 61-82.
Birkinshaw, J., Hood, N. and Young, S. (2005), “Subsidiary entrepreneurship, internal and external
competitive forces, and subsidiary performance”, International Business Review, Vol. 14
No. 2, pp. 227-248.
Borgatti, S.P. (2003), “The network paradigm in organizational research: a review and typology”,
Journal of Management, Vol. 29 No. 6, p. 991.
Borgatti, S.P. and Cross, R. (2003), “A relational view of information seeking and learning in social
networks”, Management Science, Vol. 49 No. 4, pp. 432-445.
Brax, S. (2005), “A manufacturer becoming service provider – challenges and a paradox”,
Managing Service Quality, Vol. 15 No. 2, pp. 142-155.
Brax, S. and Jonsson, K. (2009), “Developing integrated solution offerings for remote diagnostics:
a comparative case study of two manufacturers”, International Journal of Operations and
Production Management, Vol. 29 No. 5, pp. 539-560.
Brynjolfsson, E. and McAfee, A. (2012), Race Against the Machine: How the Digital Revolution is
Accelerating Innovation, Driving Productivity, and Irreversibly Transforming Employment
and the Economy, Digital Frontier Press, Lexington, MA.
Castaldi, C., Ten Kate, C. and Den Braber, R. (2011), “Strategic purchasing and innovation:
a relational view”, Technology Analysis & Strategic Management, Vol. 23 No. 9, pp. 983-1000.
Chase, R.B. and Garvin, D.A. (1989), “The service factory”, Harvard Business Review, Vol. 57
No. 4, pp. 61-69.
Chen, J.S., Tsou, H.T. and Ching, R.K.H. (2011), “Co-production and its effects on service
innovation”, Industrial Marketing Management, Vol. 40 No. 8, pp. 1331-1346.
Cheng J.-H., Chen M.-C. and Huang C.-M. (2014), “Assessing inter-organizational innovation
performance through relational governance and dynamic capabilities in supply chains”,
Supply Chain Management-an International Journal, Vol. 19 No. 2, pp. 173-186.
Chesbrough, H. (2003), Open Innovation: The New Imperative for Creating and Profiting from
Technology, Harvard University Press, Cambridge, MA.
Chesbrough, H. (2011), Open Services Innovation: Rethinking Your Business to Grow and Compete
in a New Era, Jossey Bass, San Francisco, CA.
Choi, T.Y. and Krause, D.R. (2006), “The supply base and its complexity: implications for
transaction costs, risks, responsiveness, and innovation”, Journal of Operations
Management, Vol. 24 No. 5, pp. 637-652.
D’Aveni, R.A. (2010), Hypercompetition: Managing the Dynamics of Strategic Maneuvering,
The Free Press, New York, NY.
D’Aveni, R.A., Dagnino, G.B. and Smith, K.G. (2010), “The age of temporary advantage”, Strategic
Management Journal, Vol. 31 No. 13, pp. 1371-1385.
JOSM Dachs, B., Biege, S., Borowiecki, M., Lay, G., Jäger, A. and Schartinger, D. (2014), “Servitisation in
European manufacturing industries: empirical evidence from a large-scale database”,
26,3 The Service Industries Journal, Vol. 34 No. 1, pp. 5-23.
Daft, R. (1983), Organizational Theory and Design, West, New York, NY.
Dahlander L. and Frederiksen L. (2012), “The core and cosmopolitans: a relational view of
innovation in user communities”, Organization Science, Vol. 23 No. 4, pp. 988-1007.
418 Davies, A. (2004), “Moving base into high-value integrated solutions: a value stream approach”,
Industrial and Corporate Change, Vol. 13 No. 5, pp. 727-756.
Davies, A., Brady, T. and Hobday, M. (2007), “Organizing for solutions: systems seller vs. systems
integrator”, Industrial Marketing Management, Vol. 36 No. 2, pp. 183-193.
Den Hertog, P., Van der Aa, W. and de Jong, M.W. (2010), “Capabilities for managing service
innovation: towards a conceptual framework”, Journal of Service Management, Vol. 21
No. 4, pp. 490-514.
Dyer, J. and Singh, H. (1998), “The relational view: cooperative strategy and sources of
interorganizational competitive advantage”, Academy of Management Review, Vol. 23
No. 4, pp. 660-679.
Dyer, J., Singh, H. and Kale, P. (2008), ”Splitting the pie: rent distribution in alliances and
networks”, Managerial and Decision Economics, Vol. 29 No. 2, pp. 137-148.
Eggert, A., Hogreve, J., Ulaga, W. and Muenkhoff, E. (2011), “Industrial services, product
innovations, and firm profitability: a multiple-group latent growth curve analysis”,
Industrial Marketing Management, Vol. 40 No. 5, pp. 661-670.
Eisenhardt, K.M. (1989), “Making fast strategic decisions in high-velocity environments”,
Academy of Management Journal, Vol. 32 No. 3, pp. 543-576.
Eisenhardt, K.M. and Martin, J.A. (2000), “Dynamic capabilities: what are they?”, Strategic
Management Journal, Vol. 21 Nos 10-11, pp. 1105-1121.
Fang, E., Palmatier, R.W. and Steenkamp, J.-B.E.M. (2008), “Effect of service transition strategies
on firm value”, Journal of Marketing, Vol. 72 No. 5, pp. 1-14.
Ferreira, F.N.H., Proença, J.F., Spencer, R. and Cova, B. (2013), “The transition from products to
solutions: external business model fit and dynamics”, Industrial Marketing Management,
Vol. 42 No. 7, pp. 1093-1101.
Fischer, T., Gebauer, H., Gregory, M., Ren, G. and Fleisch, E. (2010), “Exploitation or exploration
in service business development? Insights from a dynamic capabilities perspective”,
Journal of Service Management, Vol. 21 No. 5, pp. 591-624.
Gawer, A. and Cusumano, M.A. (2002), Platform Leadership: How Intel, Microsoft and Cisco Drive
Industry Innovation, Harvard Business School Press, Boston, MA.
Garud, R. and Kotha, S. (1994), “Using the brain as a metaphor to model flexible production
systems”, Academy of Management Review, Vol. 19 No. 4, pp. 671-698.
Gebauer, H. (2007), “An investigation of antecedents for the development of customer support
services in manufacturing companies”, Journal of Business-to-Business Marketing, Vol. 14
No. 3, pp. 59-96.
Gebauer, H. (2008), “Identifying service strategies in product manufacturing companies by
exploring environment-strategy configurations”, Industrial Marketing Management,
Vol. 37 No. 3, pp. 278-291.
Gebauer, H. (2011), “Exploring the contribution of management innovation to the evolution of
dynamic capabilities”, Industrial Marketing Management, Vol. 40 No. 8, pp. 1238-1250.
Gebauer, H., Fischer, T. and Fleisch, E. (2005), “Overcoming the service paradox in
manufacturing companies”, European Management Journal, Vol. 23 No. 1, pp. 14-26.
Gebauer, H., Edvardsson, B. and Bjurko, M. (2010a), “The impact of service orientation in Seeking
corporate culture on business performance in manufacturing companies”, Journal of
Service Management, Vol. 21 No. 2, pp. 237-259.
competitive
Gebauer, H., Fischer, T. and Fleisch, E. (2010b), “Exploring the interrelationship among patterns
advantage
of service strategy changes and organizational design elements”, Journal of Service
Management, Vol. 21 No. 1, pp. 103-129.
Gebauer, H., Friedli, T. and Fleisch, E. (2006), “Success factors for achieving high service 419
revenues in manufacturing companies”, Benchmarking: An International Journal, Vol. 13
No. 3, pp. 374-386.
Gebauer, H., Gustafsson, A. and Witell, L. (2011), “Competitive advantage through service
differentiation by manufacturing companies”, Journal of Business Research, Vol. 64 No. 12,
pp. 1270-1280.
Gebauer, H., Paiola, M. and Edvardsson, B. (2012a), “A capability perspective on service business
development in small and medium-sized suppliers”, Scandinavian Journal of Management,
Vol. 28 No. 4, pp. 321-339.
Gebauer, H., Paiola, M. and Saccani, N. (2013), “Characterizing service networks for moving
from products to solutions”, Industrial Marketing Management, Vol. 42 No. 1,
pp. 31-46.
Gebauer, H., Ren, G.J., Valtakoski, A. and Reynoso, J. (2012b), “Service-driven manufacturing:
provision, evolution and financial impact of services in industrial firms”, Journal of Service
Management, Vol. 23 No. 1, pp. 120-136.
Gilbert R.J. and Newbery D.M.G. (1982), “Preemptive patenting and the persistence of monopoly”,
The American Economic Review, Vol. 72 No. 3, pp. 514-526.
Grant, R. (1996), “Toward a knowledge-based theory of the firm”, Strategic Management Journal,
Vol. 17 No. S2, pp. 109-122.
Gremyr, I., Löfberg, N. and Witell, L. (2010), “Service innovations in manufacturing firms”,
Managing Service Quality, Vol. 20 No. 2, pp. 161-175.
Gulati, R., Nohria, N. and Zaheer, A. (2000), “Strategic networks”, Strategic Management Journal,
Vol. 21 No. 3, pp. 203-215.
Hakanen, T. and Jaakkola, E. (2012), “Co-creating customer-focused solutions within business
networks: a service perspective”, Journal of Service Management, Vol. 23 No. 4,
pp. 593-611.
Helfat, C.E. and Peteraf, M.A. (2003), “The dynamic resource-based view: capability lifecycles”,
Strategic Management Journal, Vol. 24 No. 10, pp. 997-1010.
Henard, D.H. and McFadyen, M.A. (2012), “Resource dedication and new product performance:
a resource-based view”, Journal of Product Innovation Management, Vol. 29 No. 2,
pp. 193-204.
Henneberg, S.C., Gruber, T. and Naudé, P. (2013), “Services networks: concept and research
agenda”, Industrial Marketing Management, Vol. 42 No. 1, pp. 3-8.
Hobday, M. (1998), “Product complexity, innovation and industrial organisation”, Research policy,
Vol. 26 No. 6, pp. 689-710.
Hobday, M., Davies, A. and Prencipe, A. (2005), “Systems integration: a core capability of the
modern corporation”, Industrial and Corporate Change, Vol. 14 No. 6, pp. 1109-1143.
Holmström, J., Brax, S. and Ala-Risku, T. (2010), “Comparing provider-customer constellations of
visibility-based service”, Journal of Service Management, Vol. 21 No. 5, pp. 675-692.
Hunt, S.D. (1997), “Competing through relationships: grounding relationship marketing
in resource‐advantage theory”, Journal of Marketing Management, Vol. 13 No. 5,
pp. 431-445.
JOSM Hypko, P., Tilebein, M. and Gleich, R. (2010), “Benefits and uncertainties of performance-based
contracting in manufacturing industries: an agency theory perspective”, Journal of Service
26,3 Management, Vol. 21 No. 4, pp. 460-489.
Iansiti, M. and Levien, R. (2004), “Strategy as ecology”, Harvard Business Review, Vol. 82 No. 3,
pp. 68-81.
Inemek, A. and Matthyssens, P. (2013), “The impact of buyer-supplier relationships on supplier
420 innovativeness: an empirical study in cross-border supply networks”, Industrial Marketing
Management, Vol. 42 No. 4, pp. 580-594.
Jacobides, M.G., Knudsen, T. and Augier, M. (2006), “Benefiting from innovation: value creation,
value appropriation and the role of industry architectures”, Research Policy, Vol. 35 No. 8,
pp. 1200-1221.
Kim, N., Pae, J.H., Han, J.K. and Srivastava, R.K. (2010), “Utilization of business technologies:
managing relationship-based benefits for buying and supplying firms”, Industrial
Marketing Management, Vol. 39 No. 3, pp. 473-484.
Kindström, D. and Kowalkowski, C. (2009), “Development of industrial service offerings:
a process framework”, Journal of Service Management, Vol. 20 No. 2, pp. 156-172.
Kindström, D., Kowalkowski, C. and Sandberg, E. (2013), “Enabling service innovation: a
dynamic capabilities approach”, Journal of Business Research, Vol. 66 No. 8,
pp. 1063-1073.
Klepper, S. (1996), “Entry, exit, growth, and innovation over the product life cycle”, The American
Economic Review, Vol. 86 No. 3, pp. 562-583.
Kohtamäki, M., Partanen, J. and Möller, K. (2013a), “Making a profit with R&D services – the
critical role of relational capital”, Industrial Marketing Management, Vol. 42 No. 1,
pp. 71-81.
Kohtamäki, M., Partanen, J., Parida, V. and Wincent, J. (2013b), “Non-linear relationship between
industrial service offering and sales growth: the moderating role of network capabilities”,
Industrial Marketing Management, Vol. 42 No. 8, pp. 1374-1385.
Kowalkowski, C., Kindström, D. and Gebauer, H. (2013a), “ICT as a catalyst for service
business orientation”, Journal of Business and Industrial Marketing, Vol. 28 No. 6,
pp. 506-513.
Kowalkowski, C., Witell, L. and Gustafsson, A. (2013b), “Any way goes: identifying value
constellations for service infusion in SMEs”, Industrial Marketing Management, Vol. 42
No. 1, pp. 18-30.
Kowalkowski, C., Kindström, D., Alejandro, T.B., Brege, S. and Biggemann, S. (2012), “Service
infusion as agile incrementalism in action”, Journal of Business Research, Vol. 65 No. 6,
pp. 76-772.
Kraaijenbrink, J., Spender, J.-C. and Groen, A.J. (2010), “The resource-based view: a review and
assessment of its critiques”, Journal of Management, Vol. 36 No. 1, pp. 349-372.
Lamming, R., Johnsen, T., Zheng, J. and Harland, C. (2000), “An initial classification of supply
networks”, International Journal of Operations and Production Management, Vol. 20 No. 6,
pp. 675-691.
Laursen, K., Masciarelli, F. and Prencipe A. (2012), “Regions matter: how localized social capital
affects innovation and external knowledge acquisition”, Organization Science, Vol. 23 No. 1,
pp. 177-193.
Lavie, D. (2006), “The competitive advantage of interconnected firms: an extension of the
resource-based view”, Academy of Management Review, Vol. 31 No. 3, pp. 638-658.
Lay, G., Copani, G., Jäger, A. and Biege, S. (2010), “The relevance of service in European
manufacturing industries”, Journal of Service Management, Vol. 21 No. 5, pp. 715-726.
Lee, H.L. (2004), “The triple-a supply chain”, Harvard Business Rreview, Vol. 82 No. 10, Seeking
pp. 102-113.
competitive
Lei, D. and Goldhar, J.D. (1991), “Computer-integrated manufacturing (CIM): redefining advantage
the manufacturing firm into a global service business”, International Journal of Operations
& Production Management, Vol. 11 No. 10, pp. 5-18.
Léo, P.-Y. and Philippe, J. (2001), “Offer of services by goods exporters: strategic and marketing
dimensions”, Service Industries Journal, Vol. 21 No. 2, pp. 91-116. 421
Levitt, T. (1983), “After the sale is over”, Harvard Business Review, Vol. 61 No. 5, pp. 87-93.
Li, L.Y. (2011), “Marketing of competence-based solutions to buyers in exploratory relationships:
perspective of OEM suppliers”, Industrial Marketing Management, Vol. 40 No. 7,
pp. 1206-1213.
Lichtenthaler, U. and Lichtenthaler, E. (2009), “A capability-based framework for open
innovation: complementing absorptive capacity”, Journal of Management Studies, Vol. 46
No. 8, pp. 1315-1338.
Lightfoot, H., Baines, T. and Smart, P. (2013), “The servitization of manufacturing: a systematic
literature review of interdependent trends”, International Journal of Operations and
Production Management, Vol. 33 No. 11, pp. 1408-1434.
Löfberg, N., Witell, L. and Gustafsson, A. (2010), “Service strategies in a supply chain”, Journal of
Service Management, Vol. 21 No. 4, pp. 427-440.
Lorenzoni, G. and Lipparini, A. (1999), “The leveraging of interfirm relationships as a distinctive
organizational capability : a longitudinal study”, Strategic Management Journal, Vol. 20
No. 4, pp. 317-338.
McManus J., White, D. and Botten, N. (2008), The Market and Competitive Forces That Shape
International and Global Business, Chandos Publ, Sawston.
MacBryde, J., Paton, S. and Clegg, B. (2013), “Understanding high-value manufacturing in
Scottish SMEs”, International Journal of Operations and Production Management, Vol. 33
No. 11, pp. 1579-1598.
Maglio, P.P. and Spohrer, J. (2008), “Fundamentals of service science”, Journal of the Academy of
Marketing Science, Vol. 36 No. 1, pp. 18-20.
Mahoney, J.T. (1995), “The management of resources and the resource of management”, Journal
of Business Research, Vol. 33 No. 2, pp. 91-101.
March, J.G. (1991), “Exploration and exploitation in organizational learning”, Organization
Science, Vol. 2 No. 1, pp. 71-87.
Martin C.R. and Horne, D.A. (1992), “Restructuring towards a service orientation: the
strategic challenges”, International Journal of Service Industry Management, Vol. 3 No. 1,
pp. 25-38.
Mathieu, V. (2001a), “Product services: from a service supporting the product to a service
supporting the client”, Journal of Business and Industrial Marketing, Vol. 16 No. 1,
pp. 39-61.
Mathieu, V. (2001b), “Service strategies within the manufacturing sector: benefits, costs and
partnership”, International Journal of Service Industry Management, Vol. 12 No. 5,
pp. 451-475.
Matthyssens, P. and Vandenbempt, K. (1998), “Creating competitive advantage in industrial
services”, Journal of Business and Industrial Marketing, Vol. 13 Nos 4/5, pp. 339-355.
Matthyssens, P. and Vandenbempt, K. (2008), “Moving from basic offerings to value-added
solutions: strategies, barriers and alignment”, Industrial Marketing Management, Vol. 37
No. 3, pp. 316-328.
JOSM Matthyssens, P. and Vandenbempt, K. (2010), “Service addition as business market strategy:
identification of transition trajectories”, Journal of Service Management, Vol. 21 No. 5,
26,3 pp. 693-714.
Moore, J.F. (1993), “Predators and prey: a new ecology of competition”, Harvard Business Review,
Vol. 71 No. 3, pp. 75-86.
Moreno, V., Monteiro Pinheiro, J.R. and Joia, L.A. (2012), “Resource-based view, knowledge-based
422 view and the performance of software development companies: a study of Brazilian
SMEs”, Journal of Global Information Management, Vol. 20 No. 4, pp. 27-53.
Nakano, M., Akikawa, T. and Shimazu, M. (2013), “Process integration mechanisms in internal
supply chains: case studies from a dynamic resource-based view”, International Journal of
Logistics-Research and Applications, Vol. 16 No. 4, pp. 328-347.
Neely, A. (2008), “Exploring the financial consequences of the servitization of manufacturing”,
Operations Management Research, Vol. 1 No. 2, pp. 103-118.
Netland, T.H. and Aspelund, A. (2013), “Company-specific production systems and competitive
advantage – a resource-based view on the volvo production system”, International Journal
of Operations & Production Management, Vol. 33 Nos 11-12, pp. 1511-1531.
Nordin, F. and Kowalkowski, C. (2010), “Solutions offerings : a critical review and
reconceptualisation”, Journal of Service Management, Vol. 21 No. 4, pp. 441-459.
O’Reilly, C.A. and Tushman, M. (2008), “Ambidexterity as a dynamic capability: resolving the
innovator’s dilemma”, Research in Organizational Behavior, Vol. 28 No. 4, pp. 185-206.
Oliva, R. and Kallenberg, R. (2003), “Managing the transition from products to services”,
International Journal of Service Industry Management, Vol. 14 No. 2, pp. 160-172.
Oliveira, P. and Roth, A.V. (2012), “The influence of service orientation on B2B e-service
capabilities: an empirical investigation”, Production and Operations Management, Vol. 21
No. 3, pp. 423-443.
Paiola, M., Saccani, N., Perona, M. and Gebauer, H. (2013), “Moving from products to solutions:
strategic approaches for developing capabilities”, European Management Journal, Vol. 31
No. 4, pp. 390-409.
Peteraf, M.A. (1993), “The cornerstones of competitive advantage: a resource-based view”,
Strategic Management Journal, Vol. 14 No. 3, pp. 179-191.
Pisano, G.P. and Teece, D.J. (2007), “How to capture value from innovation : shaping intellectual
property and industry architecture”, Vol. 50 No. 1, pp. 278-296.
Porter, M.E. (1980), Competitive Strategy: Techniques for Analyzing Industries and Competitors,
FreePress, New York, NY.
Porter, M.E. (2008), “The five competitive forces that shape strategy”, Harvard Business Review,
Vol. 86 No. 1, pp. 78-93, 137.
Powell, W. (1998), “Learning from collaboration: knowledge and networks in the
biotechnology and pharmaceutical industries”, California Management Review, Vol. 40
No. 3, pp. 228-240.
Quinn, J., Doorley, T. and Paquette, P. (1990), “Beyond products: services-based strategy”,
Harvard Business Review, Vol. 68 No. 2, pp. 58-68.
Quinn, J.B. (1985), “Managing innovation: controlled chaos”, Harvard Business Review, Vol. 63
No. 3, pp. 73-84.
Raddats, C. and Easingwood, C. (2010), “Services growth options for B2B product-centric
businesses”, Industrial Marketing Management, Vol. 39 No. 8, pp. 1334-1345.
Rass, M., Dumbach, M., Danzinger, F., Bullinger, A.C. and Moeslein, K.M. (2013),
“Open innovation and firm performance: the mediating role of social capital”, Creativity
and Innovation Management, Vol. 22 No. 2, pp. 177-194.
Reiskin, E.D., White, A.L., Johnson, J.K. and Votta, T.J. (1999), “Servicizing the chemical supply Seeking
chain”, Journal of Industrial Ecology, Vol. 3 Nos 2-3, pp. 19-31.
competitive
Ritter, T. (2000), “A framework for analyzing interconnectedness of relationships”, Industrial advantage
Marketing Management, Vol. 29 No. 4, pp. 317-326.
Roberts, R. (1998), “Managing innovation: the pursuit of competitive advantage and the design of
innovation intense environments”, Research Policy, Vol. 27 No. 2, pp. 159-175.
Rumelt, R.P. (1984), “Towards a strategic theory of the firm. Alternative theories of the firm”, in 423
Competitive Strategic Management, Prentice-Hall, Engelwood Cliffs, NJ.
Salonen, A. (2011), “Service transition strategies of industrial manufacturers”, Industrial
Marketing Management, Vol. 40 No. 5, pp. 683-690.
Sambharya, R.B. and Lee, J. (2014), “Renewing dynamic capabilities globally: an empirical
study of the world’s largest MNCs”, Management International Review, Vol. 54 No. 2,
pp. 137-169.
Sammarra, A. and Biggiero, L. (2008), “Heterogeneity and specificity of inter-firm knowledge
flows in innovation networks”, Journal of Management Studies, Vol. 45 No. 4,
pp. 200-829.
Sanchez, R. (1995), “Strategic flexibility in product competition”, Strategic Management Journal,
Vol. 16 No. S1, pp. 135-159.
Shaked, A. and Sutton, J. (1982), “Relaxing price competition through product differentiation”,
The Review of Economic Studies, Vol. 49 No. 1, pp. 3-13.
Shan, W., Walker, G. and Kogut, B. (1994), “Interfirm cooperation and startup innovation in the
biotechnology industry”, Strategic Management Journal, Vol. 15 No. 5, pp. 387-394.
Shapiro, C. (1989), “The theory of business strategy”, The Rand Journal of Economics, Vol. 20
No. 1, pp. 125-137.
Sisodiya, S.R., Johnson, J.L. and Grégoire, Y. (2013), “Inbound open innovation for enhanced
performance: enablers and opportunities”, Industrial Marketing Management, Vol. 42 No. 5,
pp. 836-849.
Smith, D.J. (2013), “Power-by-the-hour: the role of technology in reshaping business strategy at
rolls-royce”, Technology Analysis and Strategic Management, Vol. 25 No. 8, pp. 987-1007.
Spring, M. and Araujo, L. (2009), “Service, services and products: rethinking operations strategy”,
International Journal of Operations & Production Management, Vol. 29 No. 5, pp. 444-467.
Spring, M. and Araujo, L. (2013), “Beyond the service factory: service innovation in
manufacturing supply networks”, Industrial Marketing Management, Vol. 42 No. 1,
pp. 59-70.
Storbacka, K. (2011), “A solution business model: capabilities and management practices for
integrated solutions”, Industrial Marketing Management, Vol. 40 No. 5, pp. 699-711.
Teece, D.J. (2007), “Explicating dynamic capabilities: the nature and microfoundations of
(sustainable) enterprise performance”, Strategic Management Journal, Vol. 28 No. 13,
pp. 1319-1350.
Teece, D.J. (2014), “A dynamic capabilities-based entrepreneurial theory of the multinational
enterprise”, Journal of International Business Studies, Vol. 45, No. 1, pp. 8-37.
Teece, D.J., Pisano, G. and Shuen, A. (1997), “Dynamic capabilities and strategic management”,
Strategic Management Journal, Vol. 18 No. 7, pp. 509-533.
Thomas, L.G. (1996), “The two faces of competition: dynamic resourcefulness and the
hypercompetitive shift”, Organization Science, Vol. 7 No. 3, pp. 221-242.
Tirole, J. (1988), The Theory of Industrial Organization, MIT press, Cambridge, MA.
JOSM Tuli, K., Kohli, A. and Bharadwaj, S. (2007), “Rethinking customer solutions : from product
bundles to relational processes”, Journal of Marketing, Vol. 71 No. 3, pp. 1-17.
26,3
Turunen, T.T. and Toivonen, M. (2011), “Organizing customer-oriented service business in
manufacturing”, Operations Management Research, Vol. 4 Nos 1-2, pp. 74-84.
Ulaga, W. and Reinartz, W.J. (2011), “Hybrid offerings : how manufacturing firms combine goods
and services successfully”, Journal of Marketing, Vol. 75 No. 6, pp. 5-23.
424 Utterback, J.M. and Suárez, F.F. (1993), “Innovation, competition, and industry structure”,
Research Policy, Vol. 22 No. 1, pp. 1-21.
Vandermerwe, S. and Rada, J. (1988), “Servitization of business: adding value by adding services”,
European Management Journal, Vol. 6 No. 4, pp. 314-324.
Vargo, S.L. and Lusch, R.F. (2004), “Evolving to a new dominant logic for marketing”, Journal of
Marketing, Vol. 68 No. 1, pp. 1-17.
Vargo, S.L. and Lusch, R.F. (2008), “Service-dominant logic: continuing the evolution”, Journal of
the Academy of Marketing Science, Vol. 36 No. 1, pp. 1-10.
Velamuri, V.K., Neyer, A.-K. and Möslein, K.M. (2011), “Hybrid value creation: a systematic
review of an evolving research area”, Journal fur Betriebswirtschaft, Vol. 61 No. 1, pp. 3-35.
Verbeke, A. and Yuan, W. (2013), “The drivers of multinational enterprise subsidiary
entrepreneurship in China: a new resource-based view perspective”, Journal of
Management Studies, Vol. 50 No. 2, pp. 236-258.
Vickery, S.K., Koufteros, X. and Droge, C. (2013), “Does product platform strategy mediate the
effects of supply chain integration on performance? A dynamic capabilities perspective”,
IEEE Transactions on Engineering Management, Vol. 60 No. 4, pp. 750-762.
Visnjic Kastalli, I. and Van Looy, B. (2013), “Servitization : disentangling the impact of service
business model innovation on manufacturing firm performance”, Journal of Operations
Management, Vol. 31 No. 4, pp. 169-180.
Visnjic Kastalli, I., Van Looy, B. and Neely, A. (2013), “Steering manufacturing firms towards service
business model innovation”, California Management Review, Vol. 56 No. 1, pp. 100-123.
Wales, W.J., Patel, P.C., Parida, V. and Kreiser, P.M. (2013), “Nonlinear effects of entrepreneurial
orientation on small firm performance: the moderating role of resource orchestration
capabilities”, Strategic Entrepreneurship Journal, Vol. 7 No. 2, pp. 93-121.
Wang, C.L. and Ahmed, P.K. (2007), “Dynamic capabilities: a review and research agenda”,
International Journal of Management Reviews, Vol. 9 No. 1, pp. 31-51.
Wernerfelt, B. (1984), “The resource-based view of the firm”, Strategic Management Journal,
Vol. 5 No. 2, pp. 171-180.
Wernerfelt, B. (1995), “The resource‐based view of the firm: ten years after”, Strategic
Management Journal, Vol. 16 No. 3, pp. 171-174.
Windahl, C. and Lakemond, N. (2006), “Developing integrated solutions: the importance of
relationships within the network”, Industrial Marketing Management, Vol. 35 No. 7,
pp. 806-818.
Wise, R. and Baumgartner, P. (1999), “Go downstream – the new profit imperative in
manufacturing”, Harvard Business Review, Vol. 77 No. 5, pp. 133-141.
Yli-Renko, H., Autio, E. and Sapienza, H.J. (2001), “Social capital, knowledge acquisition, and
knowledge exploitation in young technology-based firms”, Strategic Management Journal,
Vol. 22 No 6-7, pp. 587-613.
Yoo, Y., Boland, R.J. Jr, Lyytinen, K. and Majchrzak, A. (2012), “Organizing for innovation in the
digitized world”, Organization Science, Vol 23 No. 5, pp. 1398-1408.
Zaheer, A., Gozubuyuk, R. and Milanov, H. (2010), “It’s the connections: the network perspective in Seeking
interorganizational research”, Academy of Management Perspectives, Vol. 24 No. 1, pp. 62-77.
competitive
Zahra, S.A., Sapienza, H.J. and Davidsson, P. (2006), “Entrepreneurship and dynamic capabilities:
a review, model and research agenda”, Journal of Management Studies, Vol. 43 No. 4,
advantage
pp. 917-955.

About the authors

Ville Eloranta is a Doctoral Candidate in the Department of Industrial Engineering and
425
Management, Aalto University, School of Science (Finland). His research interests include service
platforms, solution networks and manufacturers’ service infusion. Ville joined academia after
a long career in the service design business. Ville Eloranta is the corresponding author and can be
contacted at: [email protected]
Taija Turunen is an Assistant Professor in the Department of Management Studies,
Aalto University, School of Business (Finland). Taija holds a Doctor’s Degree in Industrial
Engineering and Management (Aalto University, School of Science). During her academic career
Taija has managed several research projects in the area of service operations management
and service innovation. Before joining academia, Taija worked as a management consultant in
the field of industrial service operations.

For instructions on how to order reprints of this article, please visit our website:
www.emeraldgrouppublishing.com/licensing/reprints.htm
Or contact us for further details: [email protected]