The impact of strategy, structure and environment in developing network capabilities for product-service innovation at SMEs

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Product-service innovation is a concept where firms innovate by complementing their products with value-added services. Offering these value-added services can be interesting both from a competitive and sustainability perspective. However, manufacturing SMEs are often experiencing a bottleneck in transforming their production-oriented organisation towards a service orientated organisation. SMEs are hindered by specific barriers resulting in an inability to implement product-service innovation. In scientific literature network capabilities of a SMEs are seen as critical for overcoming these barriers. Network capabilities are the ability of an organisation to manage the interaction with customers and partners and secondly to learn from this collaborations. Prominent in the development of these network capabilities by organisations is the interplay between the strategy, structure and environment. To acquire a better insight on this developed process, the following research question is answered within this thesis: "How does the interplay between strategy, structure and environment within SMEs affect the development of network capabilities in order to implement product-service innovations?" Through qualitative case study research based on conformity, eleven cases were constructed out of the combination of in depth-interviews and strategical documents. These eleven SMEs recently successfully implemented product-service innovations. In total, this thesis consists of thirteen in-depth-interviews that were conducted digitally with an average length of one hour. Respondents were the CEO, CFO, CCO or servicer manager of these SMEs that where activity in this service transition. The main theoretical contribution of this thesis is providing insights based on empirical evidence on how SMEs create alignment between strategy, structure and environment, resulting in a set of normative principles to guide SMEs in their network capabilities development when implementing product-service innovation. Secondly, this thesis offers several alignments created by SMEs that challenge the overly simplistic direct effects proposed within the current product-service innovation literature on the development of network capabilities. In contrast to the current literature, this thesis proposes a general approach followed by SMEs consisting of top-down implementation of the service strategy set in a structure consisting of ample flexibility and integration to ensure employees can collaborate inter- and intrafirm members. Secondly, autonomy in the structure ensures that employees can adapt and learn from service interaction. Besides these theoretical contributions, this thesis also provides recommendations to guide SMEs on how to develop network capabilities by creating an alignment between their strategy, structure and environment.
Faculteit der Managementwetenschappen