Driven by diverse motives, many industrial companies have added greater service offerings to complement their products over the past two decades. While their transition to offering more supporting services generally seems to be a very promising avenue and some companies have been quite successful with this strategy, the overall picture is inconclusive. Despite their obvious connection to the products that they support, services may represent a dramatically set of activities for industrial companies to master. Offering services effectively may require significant process changes within many areas of a diversified firm’s activities.
The few extant studies of firms’ transformations to offer more services are, to date insufficient regarding theoretical explanation, identification of the specific impact and elucidation of necessary conditions for becoming an effective service provider. Building on the Resource-based View (RBV) explanation of firms’ service capabilities, this article contributes to the literature insights concerning the role of ambidexterity in evolving successfully to offer more supporting services. Applying the dynamic capabilities perspective to the phenomenon of the corporate transition to offer services overcomes some of the existing limitations and shortcomings in theoretical and empirical research concerning this topic.
Results in two case studies and a quantitative study of 25 international companies making the transition to greater service offerings identify Operations Capability and Service Capability as two key determinants of success. While the general euphoria concerning diversification into services may be dampened by the findings, results reveal clear patterns of success. Results suggest that companies that effectively manage the ambidexterity of exploiting and exploring their Service and Operations Capabilities are most likely to benefit from the evolution to greater service offerings.