Interplay of provider and customer factors for servitization success: a transaction cost theory approach

Abstract

Purpose

This study examine how provider- and customer-related factors interact to influence servitization success. It adopts the transaction cost theory along with a configurational approach and hypothesizes that different configurations of five key conditions—service offering, specific investments, perceived customer opportunism, willingness for integration and demand uncertainty—can lead to servitization success or failure.

Design/methodology/approach

The study applies fuzzy-set Qualitative Comparative Analysis (fsQCA) to a sample of 143 German manufacturers, addressing the complex causalities involved in servitization success.

Findings

The analysis identifies six sufficient configurations for servitization success and five for servitization failure. The findings reveal that servitization can succeed through various types of service offerings. While opportunism does not hinder success, the decision to offer an extensive service portfolio is influenced by anticipated opportunism and complex customer needs. Specific investments function primarily as drivers for success, particularly when combined with a limited service offering and complex customer needs. However, these investments can increase transaction costs when linked to an extensive service portfolio. Though not essential, customer integration emerges as a relevant success factor, acting as a safeguard against opportunism.

Practical implications

Servitization can be successful even with opportunism. Developing methods to assess customers’ readiness for integration can mitigate opportunistic behavior and foster successful servitization.

Originality/value

This study advances servitization research by addressing the often-overlooked interplay between provider- and customer-related factors. Applying the transaction cost theory and a cutting-edge fsQCA, it contributes to the theoretical and methodological plurality of the field.