Realizing Smart Product-Service Systems: An Analysis and Systematization of Challenges in Manufacturing Firms

Manufacturing companies increasingly aim to incorporate Smart Product-Service Systems (Smart PSS) to implement a servitization strategy. However, the transition from a traditional product manufacturer to a PSS presents significant challenges for organizations. Literature that holistically examines the specific challenges of Smart PSS implementation is scarce. This study aims to fill this gap by exploring the challenges of Smart PSS implementation. I apply case study research in the empirical context of the European machinery and equipment industry. In this context, I analyzed 20 interviews with key informants from companies that serve international markets and have several years of experience in providing Smart PSS. The findings were conceptualized according to the well-established Technology-Organization-Environment (TOE) framework. My findings reveal in sum 9 dimensions of challenges. These include the categories of infrastructure, data management, leadership, mentality, resources, operations, economy, users, and relationship. Based on these findings I developed 9 hypotheses reflecting the impact of each sub-dimensional challenge on the benefits of a servitization strategy. The hypotheses were synthesized into a comprehensive theoretical model. The findings provide a number of contributions to both the existing servitization literature and practitioners.