Abstract

Previous studies present insightful yet incomplete views on how digital servitization changes the power balance between various supply chain actors. To address this research need and provide a more coherent view, we perform an explorative single case study of a European industrial component supplier and investigate (1) which triggers cause digital servitization, (2) how digital servitization affects the power balance between supplier and its OEM customers, and (3) how the supplier responds to these effects. We identify a vicious circle of increasing competition, diminishing value contribution and shrinking market size in physical markets as drivers of digital servitization, resulting in a change of critical resource needs. Additionally, we show that digital servitization shifts supply chain power toward the actor who is more powerful prior to its advent, rephrasing the common notion that digital servitization favors per se downstream firms. Furthermore, we present different strategies suppliers can pursue to leverage digital product-service offerings in order to manage changing resource needs and gain or sustain power: leverage tacit knowledge about complex components, extend trust from physical to digital sphere, facilitate data exchange-specific investments, pull end-user demand through the supply chain, and move downstream in OEM-unserved markets

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