The 8th IEEE International Conference on Management of Innovation and Technology (ICMIT2016), Bangkok, Thailand.
The purpose of this paper is to present a visual conceptualisation of the dialogic of product-service innovation within a multinational enterprise, taking the perspective of firm internationalization theory. To do that I have leveraged on one of the most cited and critiqued model of internationalization, called the Uppsala Model (or UM).
Why pursue a visual conceptualisation of the dialogic of product-service innovation? (Or what studies in services sometimes refer to as the increasing servitisation of traditional manufactured products?)
There are two broad reasons:
The first has to do with the worries of current economic discourse that is concerned with what seems as the general decline of productivity. An example of this perspective can be found in Robert Gordon’s book entitled “The Rise and Fall of American Growth”. Gordon ponders reasons for decreasing economic productivity set within the onset of digital technology. The red flag raised is that digital technology had not delivered economic productivity as the Industrial Revolutions of the 1800s and 1900s did.
The second is that it is this speedy building of digital infrastructure and advancing ICTs that seems to drive the increase in services, both in terms of a transitioning industry and innovation. And that it is services that is for the moment, in the current economic paradigm, difficult to measure. There are a number of reasons why services are difficult to measure in terms of productivity. One is that it is only when the performance of a product can be measured, that services related to product performance can then be measured. We can see why that discounts many other softer issues when it comes to accounting for the value of services for manufactured products.
So the question is – could it be that all factors considered, the measurement of what is economically productive needs to refocus and be re-perspectivised?
The academic literature seems to find urgency in the need to account for the productivity of services. And in fact this is reflected in the types of papers published if you were to do a keyword search on “product”, “service” and then “product-service” or “servitisation”. This slide illustrates that most research is product innovation biased. And if you talk about services, what has most been researched is after sales and post sales services. Product centric research is also bout twice service centric research.
However, an interesting trend in academia is the growing interest in product-service systems. So there is recognition that things are changing, and new perspectives are to be had.
But what about practice and enterprise?
Actually, what has been found is a concurrence of ideas in enterprise.
This quotation comes from a meeting with a product manager who works in a traditionally product-centric multinational enterprise (MNE). This manager seemed to struggle with the idea of what he deemed as a need for a mindset change within the enterprise in order for it to benefit from the increasing amount of time spend on services for customers on top of just hardware product innovation and hardware sales. So that got me thinking about what I think is already well known in services research and that is the sliding continuum of product and service. In practice, as what can be seen in this particular MNE is that a lot of the organizational infrastructure from software supporting product sales to customer service maintenance contracts is still written in a manner that sees a more Cartesian divide between what is product and what is a service. In such an instance, finding a business model, a revenue stream becomes increasingly difficult with greater digital connectivity because then all work becomes hidden, noticeable only when something breaks down and you need to interface with someone for the realization that there exists support.
Also inherent in this quotation here is the realisation of the impact of the global operations of an MNE. Manager L recognises the need for a mindset change in the enterprise, yet it is this change of perspective that is often a process that takes time, to a large extent because you have to reconcile different types of enterprise knowledge that is traditionally product centric to one that is more service centric. And it is this global context of the move from product to service that I was more interested to address in terms of how the phenomena might be studied, and how it can be perspectivised, from a firm internationalisation theory.
In the services literature, scholars have tried to systematise the study of services, coming up with this four quadrant model. This model has its foundations in economic theory with neo-Schumpeterian and post-Lancasterian influences in the technologist / assimilation, service-oriented / demarcation and integrative / synthesizing frameworks.
What I am going to present here today in the upcoming slides, is a visual conceptualisation of the dialogic of product-service innovation that is slightly different from what has been presented in the service innovation literature, as mentioned before, it focuses on the theory of firm internationalisation.
But what I’m about to present can be situated within the “new synthesis / integration” perspective of services literature.
This slide shows you the Uppsala Model and its elements. For those unfamiliar with international business literature and what exactly is the Uppsala model, for the purposes of this presentation, what you’ll need to understand is the fundamental ideas behind the Uppsala model on firm internationalisation:
(i) The first is that the authors of the Uppsala model take as core activity of the enterprise, not production but the activity of exchange. So an enterprise’s main role is not to produce, but rather to participate in exchange.
(ii) The second is that this that this exchange activity is continuous. Once it is continuous, you get processes o change and management under uncertainty. Because context changes occur over time, which also means that the enterprise is one that learns.
The implications of two fundamental understandings behind the Uppsala model for the study of product-service innovation is that it is the ability for the enterprise to reconfigure their portfolio of product-service offerings and make this transition takes time.
The transition consists of dialogic processes that take place in the context of the enterprise workings.
And, that these dialogic processes often occur along the enterprise boundaries of its networking.
But how can the Uppsala model be used to support studies of product-service innovation from a synthesis perspective?
In the Uppsala model, the authors talk about “the firm as a whole” (Vahlne & Ivarsson 2014:227) when discussing the processes of internationalization. One of the pre-requisites for internationalisation is that this “firm as a whole” contains within it many subsidiaries, otherwise no internationalisation takes place. So subsidiaries in the enterprise are a taken for granted phenomenon, and the distinction between “firm as a whole” and its “subsidiaries” is not explicitly made in the Uppsala model.
But if that distinction is made, between enterprise and its subsidiaries, and visualised, what results is an opening up of perspectives and of knowledge zones, like this shown in the next slide.
This four quadrant model – called the Götheborg IV model – shows you a different means to perspectivise the elements found in the Uppsala model.
To make a clarification, the Götheborg model is a means to perspectivise elements within the Uppsala model. It is not to replace the Uppsala model nor I would even say to improve upon the Uppsala model. Depending upon the research design and perspective, the Götheborg IV model is what I found, from an applied linguistics perspective, interesting when discussing the product to service movement or transition and how to conceptually visualise it.
So in this four quadrant visualisation, I made a distinction between “firm as a whole” labelled H, and its subsidiary labelled H1. I was curious – what if you made this distinction explicit, what happens? What more can you see? And this is the resulting visualisation of the elements.
H refers to the “firm as a whole”, H1 refers to a subsidiary, and Hn refers to the any number of subsidiaries that H or an enterprise can have.
All elements that are in this slide, comes from the empirical findings of the Uppsala Model. Time in the G4 model is taken as embedded in the context of firm evolution and development. All processes take place in the unfolding of Time. So what has been distinguished as State or Change variables is seen as taking place in and through Time in the Götheborg IV model. So Time as such is not listed in any quadrant, it is rather considered the spacetime (contextual) fabric in which all events unfold.
I think we can all agree that the innovative processes of an enterprise requires different types of knowledges. Each quadrant here represents a perspective and thus represents a different type of knowledge or knowledge zone.
About 75% of the world’s languages use referent words that distinguish between subject, object and verb that can be unfolded into giving you the different perspectives of any contextualized event or process. It is also these referent words in language that gives us the 8 major methodologies that we find across all academic disciplines from the study of natural science to social science. The examples that appear in is four quadrant model of major methodologies is neither exclusive nor exhaustive. You’ll find that while certain disciplines might tend to favour certain types of methodologies, you will find combinations of methodologies across disciplines. These four quadrants will represent different types of knowledge zones all contributing towards the overall scientific paradigm, and body of scientific knowledge.
The Upper Left quadrant is the perspective of “I” or what is subjective. If you study the “I” from an external perspective, then you have a study of “You”. In the Uppsala model, you have organisational psyche and commitment that is located in this quadrant in the Götheborg IV model.
The intersubjective perspective is in the Lower Left quadrant. This is the study of “We” or “They”. In this quadrant, you’ll find the elements of the Uppsala model that refer to continuous learning, culture, trust. Research and knowledge on foreign market, foreign cultures are also found in this quadrant.
The Upper Right quadrant is where most elements of the Uppsala model is found, much due to that the nature of international business studies is empirically based research and findings. This is the quadrant of “It” or objective focus.
The Lower Right quadrant is about the system and network perspective, knowledge from the collective inter-objective, “Its”. So this is where knowledge of the organization matrix, its global distribution of R&D network for example, is found.
One could say that the Götheborg IV model is an applied linguistics perspective, the use of deictic function of pronouns that help unfold the elements of the Uppsala model.
The Uppsala model was built from studies of Swedish MNEs. And in this model here, because you can perspectivise research findings, I’ve complemented the findings with a study that I did in 2009, also from Swedish MNEs, but I had a different methodology.
As a matter of visualisation and to see how knowledge gaps can be identified and filled in, the darker print elements here are to do with product-service innovation. So the enterprise will need to first be committed to this transition or shift in perspective from product centric to service centric. That is in the subjective Upper Left quadrant, the psyche of the enterprise and its subjective positioning.
It is in the intersubjective collective quadrant in the Lower Left that you have a co-creation and co-development of product service support between subsidiary and enterprise. And if you look at the collective intersubjective Lower Right quadrant, you’ll see that research that deal with the interactions between global R&D network of the enterprise with those of others might be where product-service innovation takes place. And it is an understanding of the processes that take place in this quadrant that the enterprise can get foreign market support for its servitisation transition or orchestrate a strategy for its global servitisation dynamics.
In brief synopsis, there is an acknowledged need to address product-service innovation processes, both in academia and in practice. The focus of this paper is to address this gap in knowledge and to study this from a firm internationalization perspective.
What bridges service innovation literature to a firm internationalization perspective of product-service innovation is this complementary perspective to the ‘new synthesis / integration’ manner of conceptualising product-services in the services innovation literature.
The Götheborg IV model is a visual representation of firm internationalization processes that is perspectivised by application of the deictic function of Pronouns. By doing so, one can not only locate various knowledges present but what uncover what knowledge gaps to be filled. By designing a corresponding research framework to do a deeper enterprise analysis, product-service innovation can be identified in its context/s of occurrence.
Thank you for listening.