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Worth the risk? The...
Worth the risk? The profit impact of outcome-based service offerings for manufacturing firms
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- Korkeamäki, Lauri (author)
- Luleå tekniska universitet,Industriell ekonomi,University of Vaasa, School of Management, PO Box 700, FI-65101 Vaasa, Finland
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- Kohtamäki, Marko (author)
- Luleå tekniska universitet,Industriell ekonomi
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- Parida, Vinit, 1983- (author)
- Luleå tekniska universitet,Industriell ekonomi
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(creator_code:org_t)
- Elsevier, 2021
- 2021
- English.
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In: Journal of Business Research. - : Elsevier. - 0148-2963 .- 1873-7978. ; 131, s. 92-102
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Abstract
Subject headings
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- Because research on outcome-based service offerings (OBS) is very case study oriented, we lack empirical knowledge of OBS provider profitability in general. Drawing upon an unbalanced panel dataset (n = 1566, N = 14,756), we found that an average OBS provider manufacturer has a 4.40-percentage-point higher gross margin than an average non-OBS manufacturer. In addition, we found that large OBS providers generate lower profits. Since OBS offerings are complex and highly customized, scaling them is a challenge that requires investments in digital technologies and solution modularity. Thus, we tested the moderating role of R&D investments on the scale-profitability relationship and found that for OBS firms, R&D investments moderate the negative relationship between scale and profitability. For managers, these results highlight the profit potential of OBS but also that large OBS providers in particular must be prepared to invest in digital servitization to ensure profitability.
Subject headings
- SAMHÄLLSVETENSKAP -- Ekonomi och näringsliv -- Företagsekonomi (hsv//swe)
- SOCIAL SCIENCES -- Economics and Business -- Business Administration (hsv//eng)
Keyword
- Outcome-based service offerings
- Financial consequences of servitization
- Digital servitization
- Product-service systems (PSS)
- Business Model Innovation (BMI)
- Entreprenörskap och innovation
- Entrepreneurship and Innovation
Publication and Content Type
- ref (subject category)
- art (subject category)
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