Product–Service Systems (PSS) business models and tactics – a systematic literature review
Introduction
Integrating products and services is a growing trend among companies in today's globally competitive business environment (Mont, 2002). This phenomenon is of equal importance for both product and service providers (Baines et al., 2009, Meier et al., 2010). Integrating product and service offerings has the potential to improve efficiency, which can lead to positive economic and environmental effects for industry and society (Mont et al., 2006). Such improvements tend to add uptime or total-care services, which can lead to intensified use of products and timely replacement with newer, more efficient, and innovative products (Sundin and Bras, 2005). Building on a true life-cycle costs perspective, product and service solutions create incentives for optimizing energy and consumables, as well as prolonging a product's life (Tukker, 2004). Thus, the potential benefits of offering integrated product and service solutions has economic, social, and environmental effects as companies improve resource utilization and competitiveness (Beuren et al., 2013, Boehm and Thomas, 2013, Gaiardelli et al., 2014, Kohtamäki et al., 2013).
Research on this emerging phenomenon is discussed largely under the topic of Product–Service Systems (PSS) (Baines et al., 2007, Beuren et al., 2013). PSS are defined as a marketable set of products and services that are capable of jointly fulfilling customers' needs in an economical and sustainable manner (Goedkoop et al., 1999, Tukker, 2004). The rapid growth of the field, however, contributes to problems associated with accumulating and systematising research findings. Although recent studies have highlighted several potential benefits of PSS, insights about how companies can adopt and implement PSS business models is still very limited (Baines et al., 2007, Gaiardelli et al., 2014, Meier et al., 2010, Yoon et al., 2011). To address this shortcoming, the present study undertakes a systematic literature review that focuses on implementing PSS business models. Our justification for this review is based on two conditions.
First, although PSS represents a potential path toward sustainable resource use, it requires radical transformations for product- and service-oriented companies at the value-chain and industrial level (Martinez et al., 2010). PSS that are not developed carefully run the risk that the environmental potential will be offset by rebound effects and less careful behaviour (Kuo, 2011, Tukker, 2004). Implementing successful eco-efficient PSS is still very limited. As such, the PSS business model might be the critical factor that distinguishes PSS with positive results in terms of eco-efficiency and sustainability from those that do not capture environmental potential (Ceschin, 2013). Bocken et al. (2014) emphasised the importance and difficulties of developing sustainable business models that succeed on environmental, economic, and social levels. This triple bottom line approach is essential to evaluating the overall payoff of a PSS and underscores the importance of all three components working together (Lee et al., 2012).
In general, the literature suggests that a company's business model explains the design or architecture of the company's mechanisms to create, deliver, and capture value (Teece, 2010, Osterwalder and Pigneur, 2010). This means that every company either explicitly or implicitly employs a particular business model. In the present study, three general categories of PSS business models (product-oriented, use-oriented, and result-oriented) are discussed in relation to implementing PSS. Because the PSS literature has not discussed business models extensively (Kindström, 2010, Meier et al., 2010), a research gap exists that supports the need to develop a better understanding of how PSS business models are implemented. Thus, to contribute to contemporary knowledge about implementing PSS, a literature review focusing on business model development was undertaken. In doing so, it is possible to extend insights about the crucial factors that may differentiate successful and unsuccessful PSS companies.
Second, our current understanding of the underlying foundations for implementing PSS business models is, largely, a neglected research area (Azarenko et al., 2009, Mont et al., 2006). This literature review focuses on different operation or implementation practices that companies employ in order to maximize value and revenue creation through each of the chosen PSS business models. These practices can be regarded as tactics or tactical sets, which are defined as the residual choices that can be adapted after choosing a business model or as the business model is applied. Furthermore, the practices must fit the company's operations (Casadesus Masanell and Ricart, 2010, Evans et al., 2007). Thus, a structured aggregation and understanding of tactics within the PSS literature can help companies successfully implement diverse PSS business models.
Based on the stated research foci, the aim in the present study is to conduct a systematic literature review of how business models are implemented and their associated tactical practices. By fulfilling this purpose, how PSS strategy can be adopted is explained in two ways: (1) at a strategic level by considering business models carefully and (2) at an operational level by understanding tactical sets that can create and extract value from implementing PSS. Thus, the present study holds value for both academics and practitioners seeking to advance their knowledge about PSS business models and tactics.
Section snippets
Methodology
To advance our understanding of implementing PSS business models, the present study consisted of a systematic literature review with a specific focus on research related to business models and operational tactics. According to Cook et al. (1997), systematic review differs from a traditional general review in that it adopts a replicable, scientific, and transparent process. This leads to developing collective insights based on theoretical synthesis of existing studies. Previous researchers have
Descriptive analysis
Fig. 2 shows the distribution over time of the 67 articles related to PSS implementation, business models, and tactics. As the figure shows, the major works on this topic were published in 2003 or later. This is not surprising, as the term ‘PSS’ was first convincingly established in 1999 by Goedkoop et al. (1999), and related research began to emerge around that time. Research on business models has been driven mainly by the advent of the Internet, which, along with PSS, has grown significantly
A PSS perspective on business model implementation
The purpose of the present study is to advance our understanding of implementing PSS business models through a systematic literature review. The present study adopts the generic competitive process framework proposed by Casadesus-Masanell and Ricart (2010) to outline the general structure and process of PSS business model implementation. Adopting this logic guided our explanation that a company can select from different categories of business models based on the company's strategic direction.
Discussion and conclusion
Driven by the need for a more effective and sustainable way to use our planet's resources, research on PSS reveals high potential for balancing economic, social, and environmental benefits (Sundin and Bras, 2005, Tukker, 2004, Mont, 2002). For example, customers who are not regular users of cars may choose to use car-sharing solutions rather than buying a car. They also choose a sustainable and resource efficient solution (Kriston et al., 2010).
Still, most companies are challenged by efforts to
Acknowledgements
This work was conducted at the VINNOVA Excellence Centre the Faste Laboratory at Luleå University of Technology, Sweden. We would further like to acknowledge support of three researchers from Mälardalen University that have assisted in the early stage of literature review.
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