Characterizing service networks for moving from products to solutions

Manufacturers of capital goods may not be able to master internally all the relevant service activities for moving from products to solutions. As well, it is rarely economically viable for them to do so. Consequently, they increasingly resort to complex service networks that embrace traditional product-orientated and vertically-integrated supplier–customer relationships. Through multiple case studies this paper identifies four different types of service networks involved in the provision of solutions, and the capabilities necessary for forming and utilizing such networks. The types are: a). vertical after-sales service network, b). horizontal outsourcing service network, c). vertical life-cycle service network, and d). horizontal integration service network. Analyzed through the perspective of the “focal firm”, these network types promote understanding of the movement towards providing integrated solutions for products and services. The service components included in the solution drive the formation of the network along the vertical and horizontal dimensions. The formation and utilization of each service networks type require a specific set of dynamic capabilities (to initiate a specific network formation), and operational capabilities (that allow the network firms to develop, integrate and deliver the service components of the solution), discussed in the paper.

► Capital goods manufacturers often resort to service networks for offering integrated solutions.
► Four networks types proposed: vertical after-sales, horizontal outsourcing, vertical life-cycle and horizontal integration.
► The service components included in the solution drive the typology of service network.
► The set of dynamic and operational capabilities required to focal firms in each network type are discussed.