Theoretical contributions

The overall aim of this dissertation is to improve understanding of how manufacturing companies manage their organizational capabilities to support wealth creation from solutions. The dissertation attempts to address this concern from four different perspectives presented in four articles. Each article contributes to the specific research question by providing empirical evidence of the phenomenon.

The first article seeks to answer the question: What determines the solution provider’s strategic capabilities? This research question has been formulated because the extant servitization literature lacks the clarity of the strategic capability concept. In particular, the extant literature overlooks the concept of strategic business processes that are used to steer a firm toward achieving its strategic objectives. The key contribution of the article is the identification of a solution provider’s seven strategic capabilities. These are fleet management capability, technology-development capability, M&A capability, value quantifying capability, project-management capability, supplier network management capability, and value co-creation capability. All of these strategic capabilities are distinct, and make it possible for a solution provider to create economic rents in the markets. Compared to the prior studies that have investigated wealth creation capabilities in solution provision settings (e.g., Spring & Araujo, 2013; Storbacka, 2011; Ulaga & Reinartz, 2011) and as a second contribution, this study aditionally clarifies the critical component of strategic business processes in the emergence of strategic capabilities. The identified strategic business processes are

productivity-increasing, customer-value enhancing, and innovation-enabling business processes. Moreover, this study extends the concept of strategic capability by taking into account the importance of managing the firm’s boundaries to the firm’s performance. As a third contribution, this article classifies the solution provider’s distinct resources (those resources that do not generate sustainable competitive advantage per se), namely 1) the installed base of products and service contracts, 2) physical and technological assets, 3) intellectual capital, 4) human capital, 5) financial assets and 7) external assets (including suppliers’ and customers’ resources). These categorized resources can be utilized to evaluate, benchmark, and manage a firm’s existing resource base.

Article 1 also has methodological implications. First, the article identifies the studied case firms based on results derived from a generalizable quantitative dataset. Second, the article utilizes triangulation technique to verify the study’s results and conclusions. This triangulation technique has been encouraged in the prior servitization studies (see Ulaga & Reinartz, 2011) in addition to several methodological papers’ suggestions (see Beverland & Lindgreen, 2010;

Eisenhardt, 1989b). Article 1 is the only article in the dissertation that strictly contributes to the traditional resource-based view (and thus the static nature of capabilities). The paper is important because it describes the strategic capabilities that help a solution provider to take advantage of its extant markets and capabilities. The paper is published in the Journal of Business and Industrial Marketing.

Article 2 seeks to answer the research question: How does a manufacturer realign its resource base when becoming a solution provider? This research question has been crafted because the existing servitization and dynamic capability studies do not explain how product-based companies strategically renew themselves by changing their resource bases when becoming service-led companies. The article’s main contribution is that it defines the key modes to reconfigure a firm’s resources. These modes are 1) creating new resources, 2) leveraging existing resources and 3) releasing existing resources. The second article builds on the grounds of dynamic capabilities and advances the theoretical perspective by identifying the alteration modes and associated practices that support each mode in the context of solutions provision. However, the developed framework that describes a firm’s dynamic capability is general and can be applied in different industries, firm types, and contexts. The paper is important because it addresses how a manufacturer can renew itself successfully in practice. The paper is published in Research-Technology Management.

The third article deepens the understanding of dynamic capabilities in servitization. It contributes to the organizational routines and servitization

literatures by answering the following research question: How do a manufacturer’s organizational routines evolve when becoming a solution provider? This article is a continuation of Article 2, in that it addresses how organizational routines evolve when altering a firm’s resource base. This paper was prompted by the observation that it is typically more difficult to change personnel behavior, and established routines and norms than it is to change resources. It is not particularly challenging for a top management team to reallocate resources, but changing routines typically requires leadership skills such as motivation, empowerment, and active communication. The article’s first contribution is that it classifies routines as ostensive or performative. Ostensive routines are more abstract, general, and management-driven than performative routines that are defined as the actions undertaken by personnel. Article 3 differs from other articles in terms of case selection. As the other articles select cases based on results derived from quantitative datasets, the third article applies a purposive sampling technique. The cases used were selected from the Nasdaq OMX Nordic-listed manufacturing firms headquartered in Finland that have outperformed their peers through the adoption of servitization strategies. The paper is published as a conference proceeding at the Industrial Marketing and Purchasing Conference 2016 LQ3R]QDĔ3RODQG

The fourth article sets out to answer the research question: How do manufacturers and their customers facilitate joint learning in dyadic business relationships? Article 4 contributes to the relational view and R&D collaboration literatures. The article builds on the grounds of evolutionary economics (Nelson

& Winter, 1982) and the existing organizational research on dynamic capabilities by defining joint learning as a relational dynamic capability. The main contribution of the study lays in providing a broad and holistic illustration of how joint learning is a relational dynamic capability in conjunction with the relational practices that support it. The interplay between these relational practices and the dimensions of joint learning (knowledge sharing, mutual sense-making, knowledge codification) is central, and the latter are particularly important.

Whereas knowledge sharing enables the spread of development ideas and knowledge, mutual sense-making facilitates the search for shared understanding with regard to new ideas that enable joint knowledge development. Moreover, relationship-specific memory reinforces the memorization and implementation of knowledge so that it can be utilized in the future. As a second contribution, the results extend the extant literature on relational investments in the development of relational dynamic capabilities. These relational investments facilitate dyads to share information, make sense of that information and integrate the information into relationship memory. The third contribution is the study’s finding of relational structures for mutual learning. Relational structures such as mutual

ICT-systems, relationship steering groups, and development teams facilitate mutual learning in the relationships through establishing a more systematic way of collaborating. The study’s final contribution is the finding of relational capital to relational learning. This finding suggests that relational capital generates commitment through the social norm of reciprocity, which further facilitates the dimensions of learning. Article 4 also has methodological implications as the study’s relationships (n=7) were selected systematically from a quantitative dataset of manufacturer–customer relationships (n=91) by clustering the relational cases in terms of the extent of the R&D services (the higher value the better) and joint learning (the higher value the better) involved in the relationships. This article is particularly important when explaining the mechanism of the sources of relational rents (see Dyer & Singh, 1998) in the markets. As the management of a company’s supplier network has been acknowledged as a key source of a competitive advantage for the manufacturer (e.g., Dyer & Singh, 1998; Dyer & Nobeoka, 2000; Gulati, 1999; Ryals &

Humphries, 2007), this article highlights the importance of relational renewal and learning to the manufacturer’s competitive advantage. The paper is published in Industrial Marketing Management.