Abstract
Manufacturing small and medium enterprises (SMEs) are recognized as a major driving force economically in the European Union (EU). However, manufacturing companies and SMEs have often met with major difficulties in digitalization, and more specifically, in the implementation of novel industrial internet-enabled business models, such as pay-per-X (PPX) type business. The overall aim of this study is to understand how manufacturing companies (especially SMEs) can make use of PPX business models largely in capital product markets, and how this impacts rapid sales growth and profitability for these investment product manufacturers. The studied two investment product manufacturing companies experienced rapid sales growth and there was an impact on the overall profitability for the companies. Sales growth was significant in both companies and PPX business models opened various new opportunities to extend company businesses. We found four main mechanisms that enabled rapid sales growth through PPX business models: strategic, pricing, financing and risk management mechanisms. Both the SME companies also experienced a negative impact on profitability despite rapid sales growth through PPX business models because of issues related to financing the investment product.
This is a preview of subscription content, log in via an institution to check access.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Similar content being viewed by others
References
Ulaga, W., et al.: From product to service: navigating the transition. Insights@ IMD. 1–4 (2013)
Müller, J.M., Buliga, O., Voigt, K.-I.: Fortune favors the prepared: how SMEs approach business model innovations in Industry 4.0. Technol. Forecast. Soc. Change. 132, 2–17 (2018). https://doi.org/10.1016/j.techfore.2017.12.019
Mittal, S., Khan, M.A., Romero, D., Wuest, T.: A critical review of smart manufacturing & Industry 4.0 maturity models: Implications for small and medium-sized enterprises (SMEs). J. Manuf. Syst. 49, 194–214 (2018). https://doi.org/10.1016/j.jmsy.2018.10.005
Gebauer, H., Saul, C.J., Haldimann, M., Gustafsson, A.: Organizational capabilities for pay-per-use services in product-oriented companies. Int. J. Prod. Econ. 192, 157–168 (2017). https://doi.org/10.1016/j.ijpe.2016.12.007
Wittkowski, K., Moeller, S., Wirtz, J.: Firms’ intentions to use nonownership services. J. Serv. Res. 16, 171–185 (2013). https://doi.org/10.1177/1094670512471997
Ehret, M., Wirtz, J.: Unlocking value from machines: business models and the industrial internet of things. J. Market. Manage. 33, 111–130 (2017). https://doi.org/10.1080/0267257X.2016.1248041
Ardolino, M., Rapaccini, M., Saccani, N., Gaiardelli, P., Crespi, G., Ruggeri, C.: The role of digital technologies for the service transformation of industrial companies. Int. J. Prod. Res. 56, 2116–2132 (2018). https://doi.org/10.1080/00207543.2017.1324224
Metallo, C., Agrifoglio, R., Schiavone, F., Mueller, J.: Understanding business model in the Internet of Things industry. Technol. Forecast. Soc. Change 136, 298–306 (2018). https://doi.org/10.1016/j.techfore.2018.01.020
Bock, M., Wiener, M.: Nonownership business models in the manufacturing industry: the role of uncertainty and the industrial Internet of Things. In: ICIS 2018 Proceedings (2018)
Gebauer, H., Edvardsson, B., Gustafsson, A., Witell, L.: Match or mismatch: strategy-structure configurations in the service business of manufacturing companies. J. Serv. Res. 13, 198–215 (2010). https://doi.org/10.1177/1094670509353933
Crozet, M., Milet, E.: Should everybody be in services? The effect of servitization on manufacturing firm performance. J. Econ. Manage. Strategy 26, 820–841 (2017). https://doi.org/10.1111/jems.12211
Cusumano, M.A., Kahl, S.J., Suarez, F.F.: Services, industry evolution, and the competitive strategies of product firms. Strateg. Manage. J. 36, 559–575 (2015). https://doi.org/10.1002/smj.2235
Gebauer, H., Saul, C.J., Haldimann, M., Gustafsson, A.: Organizational capabilities for pay-per-use services in product-oriented companies. Int. J. Prod. Econ. (2015). https://doi.org/10.1016/j.ijpe.2016.12.007
Sundin, E., Lindahl, M., Ijomah, W.: Product design for product/service systems: design experiences from Swedish industry. J. Manuf. Technol. Manage. 20, 723–753 (2009). https://doi.org/10.1108/17410380910961073
Sundin, E., Bras, B.: Making functional sales environmentally and economically beneficial through product remanufacturing. J. Clean. Prod. 13, 913–925 (2005). https://doi.org/10.1016/j.jclepro.2004.04.006
Ladas, K., Kavadias, S., Loch, C.H.: Product selling versus pay-per-use services: a strategic analysis of competing business models. Available at SSRN 3356458 (2019)
Jiang, B., Chen, P., Mukhopadhyay, T.: Software licensing: pay-per-use versus perpetual. Available at SSRN 1088570 (2007)
Author information
Authors and Affiliations
Corresponding author
Editor information
Editors and Affiliations
Rights and permissions
Copyright information
© 2020 IFIP International Federation for Information Processing
About this paper
Cite this paper
Uuskoski, M., Kärkkäinen, H., Menon, K. (2020). Rapid Sales Growth Mechanisms and Profitability for Investment Product Manufacturing SMEs Through Pay-Per-X Business Models. In: Nyffenegger, F., Ríos, J., Rivest, L., Bouras, A. (eds) Product Lifecycle Management Enabling Smart X. PLM 2020. IFIP Advances in Information and Communication Technology, vol 594. Springer, Cham. https://doi.org/10.1007/978-3-030-62807-9_32
Download citation
DOI: https://doi.org/10.1007/978-3-030-62807-9_32
Published:
Publisher Name: Springer, Cham
Print ISBN: 978-3-030-62806-2
Online ISBN: 978-3-030-62807-9
eBook Packages: Computer ScienceComputer Science (R0)
