Servitization in global markets - role alignment in global service networks for advanced service provision

© 2021 The Authors. R&D Management published by RADMA and John Wiley & Sons Ltd. 1
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Servitization in global markets:
role alignment in global service
networks for advanced service
provision
Vinit Parida1,2
and Marin Jovanovic3,*
1

Department of Business Administration, Technology and Social Sciences, Luleå University of
Technology, Luleå, A3211, Sweden.
2

School of Management, University of Vaasa, PO Box 700, FI-
65101, Vaasa, Finland. vinit.parida@ltu.se
3

Department of Operations Management, Copenhagen Business School, Solbjerg Plads 3,
Frederiksberg, 2000, Denmark. mjo.om@cbs.dk
This study investigates how global manufacturers offer advanced services, such as outcome-
based contracts, to global customers. Offering advanced services requires companies to
engage in and manage win–
win collaborations with a diverse set of service network part-
ners. However, there is currently a lack of insights into the value co-
creation challenges
faced by manufacturers’ R&D units and their service network partners. Equally, there is
a pressing need for roles to be properly aligned when offering advanced services in global
markets. Based on 34 exploratory interviews with respondents from two manufacturers and
their six globally dispersed front-
end service network partners, this study identifies diverse
co-
creation challenges related to the provision of advanced services in global markets.
The results show that complex collaborations of this nature often do not lead to win–
win
relationships but rather to less understood win–
lose or lose–
win scenarios. Our proposed
framework unpacks how to manage value co-
creation challenges and establish win–
win
relationships through role alignment. This study’s findings show that the successful provi-
sion of advanced services requires manufacturers to play the role of global service orchestra-
tors and service network partners to act as global service integrators. Thus, role alignment
provides greater latitude to establish a joint sphere of value co-
creation for back-
end and
front-
end actors. We conclude by discussing this paper’s theoretical and practical contri-
butions to the emerging literature on servitization in global markets and global service
networks.
1. Introduction
In the era of increasing globalization, manufactur-
ers increasingly complement products with various
value-
adding services to provide tailored customer-
centric solutions for global customers (Parida et al.,
2015; Rabetino et al., 2018; Khanra et al., 2021). On
the most advanced level of servitization, the man-
ufacturer’s compensation is tied to performance,
and risks are effectively transferred to the manufac-
turer, often referred to as advanced services (Baines
et al., 2017; Visnjic et al., 2017; Grubic and Jennions,
Electronic copy available at: https://ssrn.com/abstract=3940458

© 2021 The Authors. RD Management published by RADMA and John Wiley Sons Ltd.
Vinit Parida and Marin Jovanovic
2 RD Management 2021
2018; Ziaee Bigdeli et al., 2018). To successfully de-
velop and deliver such advanced services to global
customers, the role of service network partners
(Story et al., 2017; Randhawa et al., 2018; Hullova
et al., 2019) within a global service network (Lusch
et al., 2010; Reim et al., 2019) is critical. However,
several research gaps remain open on how global
manufacturers form effective value co-
creation pro-
cesses with service network partners, particularly for
the provision of advanced services globally.
First, servitization in global markets has received
less research attention (cf. Hakanen et al., 2017;
Aminoff and Hakanen, 2018; Gölgeci et al., 2021).
Prior studies largely agree that successful servitiza-
tion requires manufacturers to engage in open, joint
action with partners to deliver advanced services
to customers (Chesbrough, 2011; Randhawa et al.,
2018; Visnjic et al., 2018; Kamalaldin et al., 2021).
However, servitization in global markets means that a
wide range of intermediary partners have to be man-
aged –for example, distributors, technology provid-
ers, system integrators, and consultants (Randhawa
et al., 2018) –to efficiently reach global customers
and meet demands for local customization (Hakanen
et al., 2017). Accordingly, global manufacturers need
to set up a global service network in the form of mul-
tiple bilateral relationships with service network part-
ners (Reim et al., 2019). This kind of hub-
and-
spoke
arrangement places a significant burden on the global
manufacturer because of the investment required to
set up the partner-
specific relationship and the ongo-
ing resources needed to manage it (Williamson and
De Meyer, 2012; Shipilov and Gawer, 2020). By and
large, the global service network perspective has
been less researched in the servitization literature.
Second, the dyadic value co-
creation challenges
facing a global manufacturer and its service network
partners have been less explored. Global manufactur-
ers typically operate with a back-
end RD unit and
front-
end service network partners (Jovanovic et al.,
2019; Sklyar et al., 2019). In the context of advanced
services, the back-
end RD unit heavily relies on
front-
end service network partners to maintain direct
contact with global customers, acquire local market
knowledge, procure access to specialized technol-
ogy, and ensure geographical coverage (Jovanovic
et al., 2016; Lafuente et al., 2017; Story et al., 2017).
However, the intensified value co-
creation processes
between the back-
end RD unit and the front-
end
service network partner often create diverse chal-
lenges (Jaakkola and Hakanen, 2013; Chowdhury
et al., 2016; Kohtamäki and Rajala, 2016; Sjödin
et al., 2021). Such challenges may relate to conflict-
ing business models (Gebauer et al., 2021; Hsuan et
al., 2021), opportunistic behaviors (Sumo et al., 2016;
Steinbach et al., 2018), role ambiguity (Rönnberg
Sjödin et al., 2016), role conflicts, and power plays
(Chowdhury et al., 2016). The literature currently
lacks insights into the dyadic value co-
creation chal-
lenges embedded in global service networks, limiting
the possibility of fully understanding the reciprocal
consequences of servitization in global markets
(Raddats et al., 2019; Kamalaldin et al., 2020) as well
as the antecedents of servitization failure (Valtakoski,
2017).
Third, the current literature lacks insights into
how value co-
creation challenges are entangled with
the social roles of multiple stakeholders (Archpru
Akaka and Chandler, 2011). The social roles per-
spective defines a role as a particular set of practices
that connect an actor to one or more actors (Archpru
Akaka and Chandler, 2011). As global manufac-
turers face increased complexity from intertwining
tasks and responsibilities, the roles within a global
service network become ambiguous (Reim et al.,
2019). Truly, changes associated with a single actor’s
role can affect other actors throughout a global ser-
vice network (Archpru Akaka and Chandler, 2011).
For instance, augmented responsibilities of service
network partners often cause confusion and lead to
value co-
creation challenges. Thus, the alignment of
role expectations may be required to cope with and
manage changing value co-
creation requirements
between actors (Vargo et al., 2015). In fact, being
able to successfully establish actor-
specific roles
within the global service network is a critical activity.
However, we lack insights into how the global manu-
facturer’s back-
end RD unit and its service network
partners redefine their roles and set normative guide-
lines to ensure the successful provision of advanced
services in global markets.
Against this background, our study’s purpose is
to identify value co-
creation challenges and propose
revised roles for the global manufacturer’s RD
unit and its service network partners when deliver-
ing advanced services in global markets. Based on
34 exploratory interviews with respondents from two
manufacturers and their six globally dispersed service
network partners, this study augments the emerging
literature on servitization in global markets in the fol-
lowing ways: First, the results show that such complex
relationships often do not produce win–
win relation-
ships but rather lead to less understood win–
lose or
lose–
win scenarios. Second, this study identifies and
explains value co-
creation challenges embedded in
the global service network, such as governance, risk
management, service innovation, and service scaling
issues. Third, our research relates these challenges
to role ambiguity that needs to be accommodated by
aligning roles with normative guidelines. Therefore,

Servitization in global markets
RD Management 2021 3
our proposed framework unpacks how to manage
value co-
creation challenges and the associated role
ambiguity through role alignment. The successful
provision of advanced services requires global man-
ufacturers to play the role of global service orches-
trators while service network partners act as global
service integrators. The paper concludes by discuss-
ing our theoretical and practical contributions to the
emerging literature on value co-
creation, servitization
in global markets, and global service networks.
2. Theoretical background
2.1.
Servitization in global markets and
global service networks
Today, manufacturers employ digital technologies,
such as the Industrial Internet of Things (IIoT) and
industrial digital platforms (Jovanovic et al., 2021),
to develop and deliver advanced services glob-
ally (Baines et al., 2017; Sjödin et al., 2020). Such
advanced services require global manufacturers to
specify the outcomes for customers and reward them
to the extent that the outcomes are achieved (Grubic
and Jennions, 2018). Most studies acknowledge not
only the benefits of advanced services, such as lock-
ing in customers, leveraging product-
service com-
plementarities, generating efficiencies, and fostering
innovation (Visnjic et al., 2017; Chen et al., 2021)
but also the challenges, such as greater commercial
and operational risk (Selviaridis and Norrman, 2014;
Hou and Neely, 2018).
Servitization in global markets requires global
manufacturers to operate with multilateral service
network partners, forming a global service network
(Williamson and De Meyer, 2012; Shipilov and
Gawer, 2020). Advanced services intensify the over-
all value creation processes embedded in a global
service network (Akaka et al., 2013; Grönroos and
Voima, 2013). In particular, advanced services aug-
ment value creation processes in relation to the pro-
vider sphere, the partner sphere, and the joint sphere
(Grönroos and Voima, 2013).
First, the provider sphere expands as advanced ser-
vices require the back-
end RD unit to develop new
processes (Jovanovic et al., 2019). For instance, the
back-end RD unit would need to introduce new prod-
uct and service components, initiate new routines for
managing external partners using different governance
mechanisms, develop interfirm knowledge-
sharing
routines, make relationship-
specific investments,
monitor the relationship, and manage service network
partner expectations (Bäck and Kohtamäki, 2015;
Raddats et al., 2019; Kamalaldin et al., 2020; Solem
et al., 2021). Second, the partner sphere increases as
service network partners share the risk of delivering
advanced services (Kleemann and Essig, 2013). In
particular, service network partners need to support
high customer satisfaction (Bustinza et al., 2019) and
advanced service customization (Story et al., 2017) so
that geographical coverage is ensured (Hakanen et al.,
2017), close customer relationships are maintained
(Saccani et al., 2014), and responsiveness to the end
customer is increased (Jovanovic et al., 2016). They
also need to bring back insights to the global manu-
facturer on local market conditions, legal require-
ments, and specialized capabilities (Kowalkowski et
al., 2011; Story et al., 2017; Vendrell-
Herrero et al.,
2017). Finally, the joint sphere encompasses activi-
ties related to interactive value creation between the
provider sphere and the partner sphere (Ford and
Mouzas, 2013; Ekman et al., 2016). Taking the actor-
to-
actor (A2A) view of service-
dominant (S-
D) logic
(Lusch and Vargo, 2014), actors are seen to actively
co-
create value through resource integration and ser-
vice provision (Vargo and Lusch, 2011). In particular,
Salonen and Jaakkola (2015) found distinct internal
and external resource integration approaches when
engaging in advanced service delivery. More impor-
tantly, such value co-
creation is necessary for the suc-
cess of advanced services and could not be achieved
by the sole actor (Schulz and Geithner, 2010). Still,
global service networks are not just networks (aggre-
gations of A2A relationships); they are dynamic and
self-
adjusting systems that need to be able to simulta-
neously function and reconfigure themselves (Vargo
and Lusch, 2011; Koskela-
Huotari et al., 2016).
Indeed, the assumption of A2A “value co-
creation can
be challenged by asking whether value co-
creation
is always beneficial across contingencies and out-
comes, or if it could have non-
linear or even negative
effects on innovation, profit or sales performance”
(Kohtamäki and Rajala, 2016, p. 11). For the most
part, the multilevel perspective of value co-
creation
challenges embedded in global service networks has
been less explored (Akaka et al., 2013).
2.2. Value co-creation challenges
embedded in global service networks
The increased global aspirations of traditional man-
ufacturers have made service network partners
extremely important for the design of advanced ser-
vices and their delivery to global markets (Sjödin
et al., 2020). They hold a strategic “middleman” posi-
tion by bridging the gap between the back-
end RD
unit and globally dispersed end customers (Olsson
et al., 2013; Randhawa et al., 2018). Consequently,

even though servitization holds value for both the
manufacturer and its service network partners, the
relationships are complex and often fail to realize
their full potential (Kamalaldin et al., 2020).
Indeed, it can be argued that there is a simplis-
tic, overly optimistic view of the inherently complex
dyadic relationships between a global manufacturer’s
back-
end RD unit and the service network part-
ners (Nullmeier et al., 2016; Kreye, 2017; Steinbach
et al., 2018). For example, advanced services pro-
vide opportunities for service network partners to
generate additional value and potentially increase
revenue generation (Sjödin et al., 2020; Linde et
al., 2021a; Thomson et al., 2021). At the same time,
however, service network partners may struggle to
cope with new service agreements due to financial
constraints, a lack of service provision capabilities,
unfavorable service delivery conditions, and low cus-
tomer readiness (Reim et al., 2019). In addition, both
manufacturers and service network partners may act
opportunistically and counterproductively (Sumo
et al., 2016; Steinbach et al., 2018). For example, a
powerful global manufacturer may exercise power
and force service network partners to offer advanced
services even though they are unwilling or unable to
take on such a responsibility and incur the associated
risks (Chowdhury et al., 2016). On the other hand,
service network partners may also exercise power
if they hold the position of monopolist in the local
market or if the switching costs are high (Vendrell-
Herrero et al., 2017). In addition, actors may display
conflicting views due to a lack of necessary infor-
mation regarding priorities and evaluation criteria
(Rönnberg Sjödin et al., 2016) and different goals
that spell misalignment (Chowdhury et al., 2016).
Moreover, the manufacturer’s RD unit–
service
network partner relationship has much structural and
contextual ambiguity because of the need for con-
tinuous innovation and transformation in advanced
services (Sjödin et al., 2020). Generally, the opti-
mistic view of the relationship between the global
manufacturer and its service network partners must
be critically examined to provide novel insights into
servitization success and failure in global markets
(Valtakoski, 2017).
2.3.
Role alignment between the RD unit
and service network partners
The social roles perspective defines roles as resources
because they carry a particular set of practices that
connects an actor to one or more actors (Archpru
Akaka and Chandler, 2011). In the context of a ser-
vice network, actors often require deviation from the
role of generic actor (Jaakkola and Hakanen, 2013;
Ekman et al., 2016). More specifically, the litera-
ture argues that engaging in service networks affects
the actor’s boundary decisions concerning identity,
competence, efficiency, and power (Salonen and
Jaakkola, 2015). In the context of advanced services,
the service network partner’s role transmutes from a
reactive role of service support to a proactive role of
anticipating and preventing problems (Kowalkowski
and Ulaga, 2017), with a consequent increase in
accountability for delegated actions (Visnjic et al.,
2018). On the other hand, the manufacturer’s RD
unit may have to take on a new role in which it
extensively delegates service activities to service net-
work partners and other third parties (Linde et al.,
2021b). Consequently, such situations often create
role ambiguity and accompanying value co-
creation
challenges with adverse effects on collaborative per-
formance (Zaheer et al., 1998; Chowdhury et al.,
2016; Steinbach et al., 2018).
Therefore, the manufacturer’s RD unit and the
service network partners need to align roles to re-
establish effective collaboration within the global
service network (Koskela-
Huotari et al., 2016).
Aligned roles must attach greater importance “not
only to compatible incentives and motives but [they]
also raise[s] the question of actors’ consistent con-
strual of the configuration of activities” (Adner,
2017, p. 42). The key logic behind role alignment is
to mitigate opportunistic behavior and to eradicate
unstable commitments between partners (Steinbach
et al., 2018). However, the way in which the manu-
facturer’s RD unit and its service network partners
revise their roles as a coping mechanism to manage
value co-
creation challenges is not well understood.
Based on the above discussion, we first seek to
identify and understand the value co-
creation chal-
lenges arising from alignment gaps between the
manufacturer’s RD unit and its service network
partners. We then investigate how the roles should
be aligned to build a win–
win relationship within
a global service network. In the next section, we
describe our case companies and the research meth-
ods that provide the empirical basis for our study.
3. Method
3.1.
Research context and sample
This study examined two global manufacturing
firms based in Sweden. The first company, Alfa,
has approximately 14,000 employees and a turn-
over of USD 1.712 billion. Alfa is considered one
of the world’s largest manufacturers of construction

equipment, including wheel loaders, excavators, and
dumpers. Alfa has a strong presence in Sweden but
offers its products and services in more than 100
countries. The second company, Beta, has approx-
imately 500 employees and a turnover of USD
141 million. Beta is a leading supplier of a press-
hardening tool to original equipment manufacturers
(OEMs) in the automotive industry. This innovative
tool is used in the construction of automobile parts,
such as doors, bumpers, and other body parts. Beta is
located in Sweden and is part of a large global corpo-
ration headquartered in Spain. It provides products to
customers in Europe, North America, and Asia.
These two firms were selected for this study for
four reasons. First, both manufacturing firms were
interested in becoming front runners through serviti-
zation. They have positioned themselves as providers
of advanced services and have set the goal of achiev-
ing more than 50% of revenue through services in
the coming years. Second, we aimed to investigate
companies that offer advanced services globally. For
Alfa, we identified advanced services that provide
equipment availability for a specific number of oper-
ational hours. For example, in some cases, Alfa, in
collaboration with its dealers, offers up to 95% avail-
ability in construction equipment. For Beta, we iden-
tified advanced services that include providing “a
certain number of strokes” or making a tool available
for a specific number of outputs over an agreed dura-
tion. For example, 100,000 strokes could be offered
over a period of two years. Third, because the study
focuses on global servitization, we wanted to gain
access to respondents from both the back-
end (i.e.,
RD unit) and the front-
end (i.e., service network
partners). That was possible in the case of both firms.
Alfa, for example, uses a global service network
that consists primarily of distributors spread across
global markets. The design and development of the
advanced service concept were primarily undertaken
in the Swedish RD unit. However, advanced ser-
vice delivery involves service network partners that
work together with the RD unit to ensure the suc-
cessful implementation of services. On the other
hand, Beta’s advanced services include installing the
press-
hardening tool in globally distributed internal
press-
hardening factories in Asia, Europe, and North
America. However, the tool is owned by a specific
automotive OEM. Consequently, Beta uses service
network partners as intermediaries to deliver outcome
guarantees. Finally, the authors have maintained a
long-
standing relationship with case firms –more
than 6 years –with numerous joint research projects
concerned with open innovation approach implemen-
tation, servitization strategy challenges, and business
model transformational needs, in particular. Thus,
the prior experience of working with these two orga-
nizations gave the authors access to rich empirical
data from the manufacturing companies’ RD units
and their service network partners.
3.2.
Research methods and data analysis
We adopted an inductive, exploratory multi-
case
study research design because we sought to obtain a
rich data set and uncover the underlying dynamics of
the phenomena under investigation (Yin, 2017). For
the most part, we performed individual interviews
on RD units in Sweden to gather the data. In total,
34 detailed interviews (14 interviews with Alfa and
6 of its service network partners and 9 interviews
with Beta and 5 of its service network partners) were
completed over three phases (see Table 1). We short-
listed those respondents who had at least two years’
experience of working within the organization with a
specific focus on issues related to offering advanced
services.
The first phase focused on exploratory interviews
to enhance our understanding of current advanced
services at Alfa and Beta and the challenges arising
from offering advanced services in global markets.
We performed 8 exploratory interviews at Alfa and
4 at Beta with senior management executives and
managers who either are directly involved in driv-
ing internal efforts in this direction or have a holis-
tic view of the company’s servitization strategy. The
second phase focused more critically on the two
advanced service offerings. More specifically, we
explored questions related to the development of
offerings, the role of the service network partners, the
challenges encountered in service delivery, and the
need to transform the RD unit’s role to address
the challenges it faced in relation to advanced ser-
vices. We conducted 8 semistructured interviews at
Alfa and 5 interviews at Beta with individuals from
middle management engaged in developing and
delivering the OBC offerings. We also collected data
from regional managers in global markets and main-
tained consistent communication with the RD unit.
The third and final phase focused on collecting data
from four of Alfa’s service network partners located
in the Netherlands, the UK, the UAE, and Nigeria,
and two of Beta’s service network partners located in
the US and Spain. In total, 11 semistructured inter-
views were conducted, with respondents from ser-
vice network partners across different geographical
regions. Service network partners provided insights
into the challenges they faced in offering advanced
services to customers, securing support from manu-
facturing company RD units, and transforming the
roles assigned to delivering advanced services. The

respondents in these interviews were both managers
and operational staff in direct contact with custom-
ers during the advanced service delivery process. Out
of 34 interviews, 8 were not recorded as requested
by the respondents concerned. In addition, second-
ary data were also collected in the form of archival
data. Using interview data and secondary data from
various sources, we attempted to triangulate the evi-
dence. The main objective of collecting secondary
data was to ensure that deep insights into the cases
were obtained and that our findings were suitably
validated.
The data analysis was based on the constant com-
parison technique (Glaser and Strauss, 1967; Maykut
and Morehouse, 2002), which provides a novel way
to identify patterns in large, complex data sets. It also
provides a systematic approach to identify empirical
themes and links between empirical themes (Braun
and Clarke, 2006). In this approach (see Figure 1),
researchers use a series of iterations and comparisons
to identify empirical themes and conceptual catego-
ries so that an empirically grounded framework is
developed. The first step in our data analysis focused
on the in-
depth analysis of raw data (e.g., interview
transcripts). By coding discrete incidents such as
common words, phrases, terms, and labels (Glaser
and Strauss, 1967) that the respondents mentioned,
it was possible to identify empirical themes. In
this study, the empirical themes refer principally to
identifying the value co-
creation challenges and the
normative guidelines for revised roles that manufac-
turers and their service network partners must adopt
when delivering advanced services in global markets.
The second step of the analysis was built on analy-
sis of the empirical themes, leading to the formation
of conceptual categories (Gioia et al., 2013). These
tended to be theoretically distinct concepts composed
by combining empirical themes. Finally, aggregate
dimensions were predefined by the research design
– namely, value co-
creation challenges in the global
service networks and aligned roles for the global
service network. Our analysis yielded six concep-
tual categories, four value co-
creation challenges,
and two aligned roles for the manufacturer’s RD
unit and its service network partners. These were fur-
ther refined based on the interplay between the data
from the interviews and the secondary sources such
as internal documents, presentations, and newspa-
pers (Kumar et al., 1993). These steps enabled us to
develop an empirically driven theoretical framework
linking various phenomena that emerged from the
data analysis.
4. Findings
4.1.
Value co-
creation challenges in the
global service network
The purpose of this study is to understand value
co-
creation challenges that negatively influence
the likelihood of developing win–
win relationships
within the global service network. We sought to find
whether the back-
end RD unit and the front-
end
service network partners face win–
lose or lose–
win
scenarios. Initial analysis revealed that win–
win rela-
tionships have not been apparent and that actors often
face numerous challenges in which one side may
lose. This was mainly due to the new demands placed
on the actors and their relationships as they engaged
in value co-
creation and jointly offered advanced
Table 1. Data collection
Company name and
descriptive information
Advanced
services
Company
informants
Service network
partners (countries)
Service network
partners (informants)
Alfa
• 14,000 Employees
• USD 1.712 Billion
• Headquarter and
RD in Sweden
Availability of
construction
equipment at
customer site
14 interviews (Senior
RD manager (3),
Development project
manager (2), Service de-
velopment manager (2),
Technology Director (1),
Portfolio manager (1),
Key account manager
(2), RD specialist (2),
and Technology lead (1))
The Netherlands,
UK, UAE, and
Nigeria
6 interviews
(Regional market
manager (4), and
Sale manager (1),
and service devel-
opment manager
(1))
Beta
• 500 Employees
• USD 141 Million
• Headquarter and
RD in Sweden
Turnkey instal-
lation of press
hardening tool
with certain
number of
strokes perfor-
mance grantee
9 interviews (RD project
manager (3), senior
RD manager (2), Line
manager (1), Service
delivery technician (2),
and RD specialist (1))
US and Spain 5 interviews
(Regional market
mangers (2), main-
tenance service
technician (2),
and Key account
manager (1))

services to global customers. Based on the data anal-
ysis, we found four key factors that lead to win–
lose
or lose–
win relationships between the manufactur-
er’s RD unit and the service network partners when
offering advanced services: governance challenges,
risk management challenges, service innovation
challenges, and service scaling challenges. In the
following section, we explain these value co-
creation
challenges that the RD unit and the service network
partners faced.
4.1.1. Governance challenges
An important value co-
creation challenge has to do
with value appropriation when aligning incentives
in global service networks. Most respondents agreed
that a core condition when offering advanced ser-
vices is creating an incentive model that is aligned so
that it is attractive to all parties involved. This means
that third-
party partners and consultants must also
be accounted for in the governance structure. They
actively help service network partners and ensure
that the customer experience of service delivery is
satisfactory. According to a regional manager from
Alfa: “We need to understand our customers’ and
our service organizations’ needs and interests to be
successful with outcome-
based contract delivery.”
Additionally, service network partners have subsid-
iaries in multiple countries, which creates additional
pressure on the global manufacturer to distribute
incentives horizontally among multiple local service
network partners. In this respect, several respondents
linked this discussion to the need for specific out-
come business models. They argued that new types
of business models in general and revenue models in
particular were needed, with greater emphasis placed
on aligning incentives across all parties involved
Figure 1. Data structure.

in advanced service delivery. As a project manager
affirmed: “We are looking for a suitable business
model, but it’s not very clear yet. We need more clar-
ity regarding this.” However, developing a model of
common incentives is challenging because of the
complexity of the global service network. A senior
manager from Beta emphasized this point: “Like our
customers, our service network needs to be globally
active; this is something that adds to the complex-
ity of offering advanced services and reaching a
common incentive model.” Thus, without adequate
governance structures across global service network
partnerships, both the back-
end and the front-
end can
face co-
creation challenges.
In the context of advanced services, the manu-
facturer’s RD unit often faces challenges related
to exercising power in global service networks.
For instance, manufacturers frequently promote
advanced services without making a strong case for
service network partners to make similar transfor-
mations. This approach forces many partners into
advanced service provision against their will and,
more importantly, they are invariably ill-
prepared.
According to a regional manager from Alfa: “Our
service partners are not the same in each country;
often, they are interested in other business develop-
ment rather than taking on riskier and more demand-
ing outcome-
based contracts.” This can lead to a
win–
lose scenario where manufacturers may win
the bid to implement an advanced service at the cost
of revenue losses for themselves and their partners.
Similarly, we found evidence of the lose–
win sce-
nario. As a senior manager from Alfa stated: “We
have had a few cases when our global dealers have
used our product-
service agreements as the basis for
developing their own customized agreements with
selected customers, which is not in our interest. This
has even sometimes led to financial losses for us.”
According to a respondent from Beta: “Sometimes
our internal service delivery partners press us to be
more cost-
competitive. In such situations, reaching
an agreement for offering value-
oriented contracts
is challenging.” It is clear, therefore, that both case
companies have experienced situations in which
win–
lose or lose–
win scenarios are likely.
4.1.2.
Risk management challenges
A global servitization transformation of the RD
unit and the service network partners must develop
a revised view of the risk management for advanced
services. In this regard, advanced services not only
have a complex cost structure but also represent risky
offerings. Providers of advanced services and their
service network partners must share accountability
for offering certain functions over the duration of a
contract. Consequently, guaranteeing outcome deliv-
ery means importing risk with limited operational
control over the global service network. As a respon-
dent from Beta explains: “It is riskier as we take
more responsibility for a long duration to offer avail-
ability. Many internal and external functions need to
be in place before we can guarantee outcome perfor-
mance.” Furthermore, both manufacturers and their
service network partners are often not well versed
in adopting a life-
cycle perspective when offering
advanced services. Such a long-
term commitment is
not limited to the manufacturer –it also affects the
services network partner –who fears being locked
into certain low-
profit agreements with customers
that could be problematic over an extended period
of years. A respondent from Alfa illustrated this very
point: “We should be more open to involving new
partners. There are issues with outcome-
based offer-
ings that are new to us, like taking a life-
cycle per-
spective. We have only recently started to think about
this.” Thus, taking a life-
cycle perspective could
present an opportunity as well as a value co-
creation
challenge for advanced service providers and their
service network partners.
On the other hand, service network partners
need to share the operational risks. In the context
of advanced services, a manufacturer’s appetite for
risk must be effectively transferred to service net-
work partners. The benefits of offering advanced
services afford an opportunity to take additional
risks in exchange for greater revenue generation pos-
sibilities. However, our empirical analysis revealed
that the risk appetite between the back-
end and the
front-
end actors might vary significantly and is com-
plicated. Alfa attempted to motivate the service net-
work partners by assuring them that, in cases where
the advanced services become unprofitable, it would
incur the costs. However, this generous and nurtur-
ing approach backfired and was soon abandoned in
the face of opportunistic behavior from the service
network partner. On the other hand, Beta took a
more conservative approach and forced service net-
work partners to take on operational risks without
any financial safety net, which led to considerable
internal and external resistance. Being able to design
and implement a risk management model that takes
into consideration the manufacturer’s and service
network partners’ perspectives is critical. However,
finding a suitable match is undoubtedly demanding
and likely to lead to an increase in value co-
creation
challenges.
4.1.3.
Service innovation challenges
For both case companies, we observed a lack of
advanced service development competence in the

RD unit. Although the RD units of both manu-
facturers are based in Sweden and have other internal
counterparts in the global service network, they still
retain a distant connection with their service network
partners. According to a service development man-
ager from Alfa: “We are a global organization with
business in more than 150 counties, and it’s very
challenging to have insights into all of our markets.
It is possible that we develop offers which are not
suitable for certain market conditions.” However,
our respondents acknowledge that their ambition is
to offer advanced services globally, which demands
engagement with service network partners from
different parts of the world. This is generally per-
ceived as a problem because developing advanced
services that would be globally competitive across
diverse markets and customer segments requires ver-
satile competencies. Service network partners often
receive demands from the global manufacturer that
are not aligned with local customers’ expectations.
Moreover, local customers are often not ready to
receive complex offerings that are poorly tailored to
local market conditions. Furthermore, global manu-
facturers face limitations regarding local regulations
and cultural differences. For instance, a respondent
from Alfa explained that “in certain markets, no one
wants to sign services as they don’t like legal docu-
mentation. So how shall we form an outcome-
based
agreement?”. Thus, the RD unit needs to develop
a new set of capabilities that would enable its staff
members to become skilled in advanced service
development.
Another dimension of the service innovation chal-
lenge relates to a partner lacking service delivery and
implementation competence in offering advanced
services. For instance, service network partners are
often not able to cover the entire geographical region
with the specific service guarantees required by the
manufacturer. Moreover, service network partners
often need substantial capital investment in order to
live up to the expectations demanded of advanced
services. However, most importantly, they need to
modify and hone their competence skills, which
were originally developed around the sale of physical
products, service sales, and service delivery. Since
advanced service agreements run over many years,
service technicians need to become closely aligned
with the customer’s operation and ensure the prom-
ised performance guarantee is achieved. According
to regional managers from Alfa: “Our service staff
members need to understand customer operations
and make regular adjustments to the product and
drive innovation with customers.” Continuous inno-
vation is a critical condition to build greater customer
satisfaction and customer retention. However, these
skill sets are in short supply in global sites, which are
often in remote locations with limited access to engi-
neering talent. A key account manager at Beta argued
that “we are increasingly promoting new recruitment
within the service network partners so we can get into
the companies new kind[s] of employees that have
[a] higher focus on the service side of the business
[instead of] not only selling products.” Moreover,
respondents from Alfa highlighted the need for a
partner development program where the RD unit’s
experienced employees would train and coach the
service network partner’s employees.
4.1.4.
Service scaling challenges
Finally, manufacturers face challenges related to
the scaling of service businesses for diverse global
markets. According to a respondent from Alfa: “Our
organization is still product-
oriented and, for them,
outcome-
business contracts are not the core busi-
ness. They want to sell technologically advanced
products.” Consequently, the RD unit often lacks
sufficient interaction with service network partners
to realize multidimensional synergies that will lead
to scalable advanced services. As there are too many
interactions to handle in the global service network,
the RD units often lack the resources to achieve
the required level of service performance. Another
respondent added that “this leads to resource prob-
lems for us to effectively develop and deliver
outcome-
based contracts.” From the manufacturer’s
perspective, the key challenge lies in scaling highly
customizable advanced services for global markets.
On the other hand, service network partners are
responsible for scaling advanced services in the local
market by managing advanced services to meet het-
erogeneous customers’ needs. Respondents from
top management positions cited the need for service
network partners to restructure their organizations.
Nevertheless, in practice, this challenge is predom-
inantly about coordinating relationships with differ-
ent kinds of customers. We find strong evidence for
customers demanding a high degree of customiza-
tion, which makes advanced services costly and at
risk of generating insufficient revenues. According
to a manager from Alfa: “Our service partners are
going to be faced with a lot of problems with offering
performance contracts due to change in the business
logic. They would be inclined to adopt the offer to
the customer, but they also need to commit resources
onsite and ensure the operational goals are achieved.”
Another challenge with the scaling of advanced ser-
vices is the inability of service network partners to
manage their relationships with supportive local
third-
party partners, such as specialized technology
providers and logistic companies. As a respondent

from Beta stated: “Each service partner has a network
of local partners; thus there is a web of actors that
need to work together for generating higher customer
value. We have noticed that, in those markets where
our service partners are skilled, relational coordina-
tion manages to generate revenue, otherwise, in most
cases, the proposed advanced service leads to reve-
nue losses.” This demonstrates the need for an agile
approach to service delivery, which has largely been
lacking. Thus, the scaling of advanced services for
service network partners was found to be a prevalent
value co-
creation challenge.
4.2.
Aligned roles for the global service
network
In this section, we propose a framework for align-
ing roles in the global provision of advanced services
(see Figure 2). First, the framework illustrates how
the global provision of advanced services triggers
role boundary expansion for both the back-
end RD
unit (e.g., provider sphere) and the front-
end service
network partner (e.g., partner sphere). In particular,
advanced services broadly expand role responsibili-
ties and role expectations related to the joint sphere
of value co-
creation and lead to role ambiguity.
Second, the framework shows that such role ambi-
guity creates distinct value co-
creation challenges
between the provider sphere and the partner sphere.
Finally, further investigation of win–
win relation-
ships reveals how actors have revised their roles to
accommodate the increased complexity of the joint
sphere. In particular, role alignment has served as
an enabler in forming a win–
win relationship and
reducing misaligned and opportunistic behavior by
actors. In the framework, we argue that the back-
end
RD unit and the front-
end service network partner
must revise their strategic, financial, knowledge, and
behavioral roles. For global manufacturers, we pro-
pose a role shift to global service orchestrator and,
for the service network partners, we advocate the role
of a global service integrator. We further elaborate
key characteristics of these roles in the following
sections.
4.2.1.
Global service orchestrator
For global manufacturers, the aligned role shifts to
that of a global service orchestrator. A new role pri-
marily implies that global manufacturers must act
as developers of standardized service offerings to
increase advanced service scalability. According to
a line manager from Beta: “We have good knowl-
edge about how our products are used across global
markets; we can use this knowledge to develop offers
that hold higher promise for the majority of markets.
They may not need to be perfect, but they should be
standardized to reduce development costs for our
local organization.” In the aligned role, we found
that global manufacturers need to develop processes
for effective information sharing and act as knowl-
edge brokers to get their diverse service network
partners to reach a certain level of service delivery
maturity. According to a technology director at Alfa:
“Some of our market organizations are very creative
and innovative. They know their customers and can
use their knowledge to create value and design con-
tracts. We should capture these success stories and
share with other partners so that they can learn and
feel motivated to undergo a similar transformation
toward offering more advanced services.” Next, we
Figure 2. A framework for role alignment in global service networks for advanced service provision.

see a new role for global manufacturers that includes
performing certain tasks while delegating others.
Another manager from Alfa added that “letting go
of control is important for the RD organization,
as markets are very different, and we can’t design
outcome-
based contacts that would fit in all settings.
We need to trust our service partners.” Most impor-
tantly, this entails a unique approach to each local
service integrator, providing clarity in interactions
and reducing role ambiguity.
4.2.2.
Global service integrator
For service network partners, we propose a new role
of a global service integrator. Successful advanced
services require service network partners to be able
to increase the customization and modularity of
advanced services to address customer requirements.
In the high-
risk, high-
reward context of advanced
services, the level of customization required is high.
According to a service development manager at one
of Alfa’s partners: “We need a higher degree of free-
dom to interact with customers, and in these interac-
tions, we have to conceive offers and detail out the
contract conditions. Sometimes, the manufacturer
does not understand the need for such adjustments.”
Another manager from one of Beta’s partners added
that the “local adaptation of outcome-
based contracts
is necessary. Even in our market, which is quite
small with limited customers, we can recognize 10
plus customer categories. They all want something
different, and we need to cope with this new role and
expectation.” Consequently, service network partners
need to codesign the advanced service and actively
share information with the manufacturer. Finally, we
found that a global service integrator role requires
the development of clear boundaries for contracted
responsibilities. Both cases showed that, in order
to make a success of a complex project, such as
advanced service provision, clear boundaries among
service network partners have to be set. For instance,
it is essential to communicate what is required from
the service network partner in order for the advanced
service to be effectively designed and delivered.
5.
Discussion and conclusion
5.1. Theoretical implications
This study contributes to the literature by advancing
understanding of the value co-
creation challenges
and the revised roles between global manufacturers
and their service network partners as they provide
advanced services to global markets. More specifi-
cally, our empirically grounded framework proposes
several implications for the literature.
First, the study contributes to the emerging liter-
ature on global servitization by extending its focus
to include the global service network perspective
(Hakanen et al., 2017; Aminoff and Hakanen, 2018;
Reim et al., 2019; Gölgeci et al., 2021). In particu-
lar, few studies have undertaken an in-
depth analysis
of the dyadic transformation involved in providing
advanced services (Kreye, 2017; Raddats et al., 2017;
Töytäri et al., 2018; Kamalaldin et al., 2020; Sjödin
et al., 2020). Nevertheless, this study provides rare
empirical insights into the fact that the relationship
between the manufacturer’s RD unit and the ser-
vice network partner is embedded in a global service
network (Akaka et al., 2013) and is likely to entail
both lose–
win and win–
lose situations. Thus, the
study also contributes to the literature on the anteced-
ents of servitization failure (Valtakoski, 2017).
Second, the study contributes to the existing
research that uses S-
D logic in the context of ser-
vitization and advanced services (Ng et al., 2013;
Smith et al., 2014; Chester Goduscheit and Faullant,
2018). In particular, the study contributes to the A2A
view of S-
D logic (Vargo and Lusch, 2011) in offer-
ing insights into the manifestation of diverse value
co-
creation challenges in the business-
to-
business
(B2B) context (Kohtamäki and Rajala, 2016; Ziaee
Bigdeli et al., 2021). Providing advanced services
requires manufacturers and service network partners
to assume greater accountability (Visnjic et al., 2017)
and, more importantly, to actively engage in a joint
sphere of interactive value creation for customers
(Grönroos and Voima, 2013; Green et al., 2017). The
study shows that, in addition to the increased pro-
vider and partner value creation spheres, the joint
sphere expands significantly in the global provision
of advanced services, resulting in diverse value co-
creation challenges (Hakanen and Jaakkola, 2012).
Third, the study provides novel multilevel insights
on the micro-
level value co-
creation challenges
related to dyadic value co-
creation, the meso-
level
challenges related to provider and partner value
creation spheres, and the macro-
level challenges
associated with the global service network (Aarikka-
Stenroos and Jaakkola, 2012; Akaka et al., 2013;
Koskela-
Huotari et al., 2016). Thus, our study aug-
ments the literature on the contextualization of value
co-
creation across varying levels (micro, meso, and
macro) of interaction (Chandler and Vargo, 2011).
The study distills four value co-
creation challenges
in the global provision of advanced services –in par-
ticular, challenges related to governance, risk man-
agement, service innovation, and service scaling.
The governance challenges tend to be problematic
given that actors may operate under different busi-
ness models (Visnjic et al., 2018; Sjödin et al., 2020).

Therefore, the manufacturer’s RD unit must closely
align incentives in relation to advanced services with
the goals of service network partners. Next, actors
may differ in their willingness and ability to take risks
and to capture revenue from advanced services (Hou
and Neely, 2018). Moreover, both actors must cope
with uncontrollable risk factors that may directly
affect the operational performance of advanced ser-
vices (Visnjic et al., 2017). Furthermore, the study
finds that both actors lack the specific capabilities
needed for advanced services (Story et al., 2017;
Jovanovic et al., 2019) and specifically for service
innovation (Evanschitzky et al., 2011; Kindström
and Kowalkowski, 2014; Chester Goduscheit and
Faullant, 2018). While providers lack advanced ser-
vice development competence in the RD unit,
service network partners lack service delivery and
implementation competence (Raddats et al., 2017;
Jovanovic et al., 2019). Finally, the inability to scale
advanced services represents a major challenge in
seeking to develop a successful long-
term relation-
ship (Rönnberg Sjödin et al., 2016). Thus, recogniz-
ing these challenges marks an important step toward
achieving a win–
win collaboration and successfully
developing and delivering advanced services globally.
Finally, the study contributes to the social roles
perspective in global service networks (Archpru
Akaka and Chandler, 2011). While the literature has
discussed role alignment or role congruence (Archpru
Akaka and Chandler, 2011), few studies have offered
an actor-
specific clarification of roles in global ser-
vice networks (cf. Rönnberg Sjödin et al., 2016). This
study proposes a framework for aligning the roles of
both the manufacturer’s RD unit and its service net-
work partners, which can facilitate “individual inter-
pretations of what to do and not to do in relationships
with other actors” (Rönnberg Sjödin et al., 2016, p.
109). In successful cases, the back-
end RD unit
takes the role of a global service orchestrator, whereas
the front end adopts the role of a global service inte-
grator. The role of the global service orchestrator
emphasizes the complexity of maintaining multilat-
eral actor-
specific relationships in the provision of
advanced services (Jovanovic et al., 2021; Linde et
al., 2021b). This new role also entails letting go of
the numerous control functions in order to ensure
effective service innovation. For example, due to the
high demand for customization, the RD unit has to
rely on service network partners to lead and manage
customer interaction and delivery. Overall, such per-
spective aligns with the service modularity literature
(Cenamor et al., 2017; Hsuan et al., 2021), which
discusses how modular thinking can ensure the real-
ization of paradoxical goals –namely, customization
and operational efficiency (Kohtamäki et al., 2020).
Similarly, the implications of role realignment may be
also relevant for the literature on positioning within
the service network (Huikkola et al., 2020).
5.2.
Managerial implications and
suggestions for future research
This study carries implications for the senior RD
managers of manufacturing firms who are required
to make decisions on the successful provision of
advanced services in global markets. First, we coun-
sel RD managers to be aware that win–lose or lose–
win scenarios are extremely common. In our study,
few service network partners were found to exploit
Alfa’s ambition to meet their own interests. They
were unable to foresee the benefits they could obtain
from providing advanced services. This finding sug-
gests that securing the interests of service network
partners and mitigating value co-
creation challenges
are critical for advanced service success.
Second, based on a global service network per-
spective, we identified challenges that, according to
our analysis, pose the greatest barriers to implement-
ing advanced service provision. These challenges are:
(1) managing relations over large spatial and cultural
distances to balance contributions from and rewards
for partners in the global service network; (2) han-
dling a wide variety of different partners in terms of
size, competence, and ownership; (3) considering a
life-
cycle perspective; and (4) realigning existing rou-
tines. We call for a closer evaluation of these value co-
creation challenges in a global service network setting.
Finally, we find support for two strategic actions
that RD managers can take to curb the negative
effect of offering advanced services to global mar-
kets. First, to handle such risks, advanced service
providers should reconfigure or develop new busi-
ness models to clarify what is needed to create and
capture value. Second, new routines on information
sharing, partner knowledge, process-
related compe-
tencies, and relational skills are needed to comple-
ment new business model requirements.
Although this study focuses on two exploratory
case studies where the aim was not to generalize the
findings, we encourage researchers to further explore
global service networks for servitization.An important
area for future research is to look into the governance
practices applied by the RD unit to design, develop,
and implement advanced services with the aim of
establishing a global market for cooperation with ser-
vice network partners (Kamalaldin et al., 2020). Also,
the relationship between the RD unit and service
network partners can be expected to evolve over time.
Thus, a longitudinal study would be highly relevant
for such an investigation. We encourage researchers to

develop quantitative models that can provide a better
explanation of why different capability configurations
are needed in offering advanced services compared to
basic services. Such studies could provide enhanced
guidance for RD managers to help them better
understand the capability gaps that exist in providing
advanced services to global markets.
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ijopm-08-2020-0507
Vinit Parida is a chaired professor of entrepre-
neurship and innovation at Luleå University of
Technology, Sweden and a professor of entrepre-
neurship and innovation at University of South
Eastern Norway. He is an associate editor for Journal
of Business Research in Business-
to-
Business
(B2B) track. He conducts research on the topics of
business model innovation, digitalization, circu-
lar economy, and organizational capabilities. He
has published 80+ papers in distinguished interna-
tional journals, including Strategic Management
Journal, Journal of Management Studies, Industrial
Marketing Management, Production and Operation
Management, Strategic Entrepreneurship Journal,
and others. He is the recipient of multiple awards for
his research work.
Marin Jovanovic is an assistant professor at the de-
partment of operations management at Copenhagen
Business School and a visiting scholar at Luleå
University of Technology. He received a Ph.D. degree
in industrial economics and management from the
KTH Royal Institute of Technology and a Ph.D. de-
gree (cum laude) in industrial management from the
Universidad Politécnica de Madrid. His research has
been published in academic journals, such as Journal
of Product Innovation Management, Technovation,
RD Management, and others. His research inter-
ests include digital transformation of manufactur-
ing and maritime industries, platform ecosystems
in the business-
to-
business context, and artificial
intelligence. Marin has held positions at the ESADE
Business School and the University of Cambridge.

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