The role of innovation capabilities upgradation and digitalization in value co-creation and PSS innovation performance

Abstract

Transitioning from a goods-dominant to service-dominant logic, manufacturing enterprises are increasingly shifting from offering standalone products to delivering integrated product-service portfolios. These enterprises often leverage ecosystems to co-create and deliver these new combinations to ease the strain on resources and capabilities during this transition. The study explores how value co-creation enabling product-service systems (PSS) innovation within manufacturing firms. Drawing on data from 398 manufacturing companies, the study empirically demonstrates that enhancing product and service innovation capabilities, driven by value co-creation, is crucial for achieving high PSS innovation performance. Moreover, it finds that enterprises tend to achieve superior PSS innovation outcomes in the deep application of digital technology. The study reveals that the primary factors differentiating PSS innovation performance are the improved innovation capabilities resulting from co-creation rather than the mere acquisition of resources, information, and experience. This research broadens the application of the dynamic resource-based view, advancing a novel perspective on the enabling mechanisms of PSS innovation within manufacturing firms. It demonstrates that the PSS innovation embedded in ecosystems is a complex co-creative process that effectively integrates resource selection and capacity building and is significantly enhanced by the deployment of digital technologies.