Managing Value Creation and Appropriation
Doctoral thesis, 2007
This thesis investigates how large Swedish manufacturing companies try to create value and appropriate financial returns by renewing their product offerings through the integration of Information and Communication Technologies (ICTs) in their established product categories, and the related challenges and opportunities this produces.
While much attention has been given to the technology dimension of diversification, the economic and commercial domains have been rather ignored in the literature. Focusing on the business practice and strategic implications of incorporating a specific set of technologies, ICTs, into products, this thesis addresses this identified gap in the management literature. Using data from multiple case studies and a survey of 37 manufacturing companies, a number of management issues related to the integration of ICTs are investigated.
The integration of ICTs in manufacturing products adds to the complexity of the technology domain and firms need to acquire some background competencies in ICTs for efficient integration. This thesis suggests that the economic and commercial domains also seem to be of major importance in diversification of the technology base of products through the incorporation of ICTs. Firms often find it necessary to transform many aspects of the way they do business, to create a better fit between value creation for their customers and profit for themselves. The firms studied often made changes to their business model, especially their sales approach. Firms also try to find new innovative ways to get rewarded for the value they deliver, often by moving downstream into the provision of services.
This thesis shows that there is more to the relationship between products and services than the complementarities emphasized in the value stream literature. New functions and increased performance from ICTs in products facilitate new product-specific services, blurring the distinction between products and services. As a result, firms could benefit from greater coordination and integration of the product and service development with the business development.
Key words: Business model, Diversification, ICT, Competencies, Innovation, Manufacturing companies, Strategy, Value creation, Value appropriation