Integrating distribution, sales and services in manufacturing: a comparative case study

Abstract

PurposeThe aim of this study is to gain important insights on integration oriented servitization identifying essential dimensions of effective structures, coordination approaches and management controls adopted by manufacturing firms that integrate forward towards distribution, sales and services.Design/methodology/approachThe study adopts a theory-guided qualitative abductive methodology to conduct a comparative case-study of two manufacturing firms in the same industry integrating forward to enhance servitization but with significantly different performance outcomes. The findings are uncovered from a broad spectrum of primary and secondary data spanning two decades.FindingsThe consistently high-performing firm puts equal emphasis on production and downstream distribution, sales and services and motivate individuals to engage in entrepreneurial efforts to develop combined product-services offerings that are valued by customers. The underperforming firm prioritizes operating efficiency driven by engineering prowess and managed through planning, standardization, authority and central controls.Research limitations/implicationsThe study is based on two representative firms operating in a specific industry context, which has ramifications for the generalizability of results and calls for replication studies to substantiate and extend findings.Practical implicationsForward integration from manufacturing into distribution, sales and services represents a specific servitization strategy that needs structure and particular coordination approaches to be effective in complex dynamic product-markets. The characteristics of the outperforming case company provide useful insights on effective integrated servitization efforts.Social implicationsForward integration is a commonly adopted strategy among manufacturing firms that constitute the backbone of modern economies and effective governance of these integration oriented servitization efforts has important implications for societal value creation.Originality/valueThis study builds on rationales from management science including economic theory, corporate strategy and different micro-foundational lenses and thereby hone recent calls for broader theoretical foundations to enlighten studies of the servitization puzzle.