Moving to sustainable servitization: categorisation and analysis of underlying approaches

As rising environmental concerns create the need to embed sustainability more centrally into business propositions, the emerging research on sustainable servitization is looking into the possibility for manufacturing companies to combine service-led growth with the generation of environmental value. Existing characterisations, however, interpret sustainable servitization as a generic strategy, failing to recognise the heterogeneity of approaches that it may encompass. This paper develops a taxonomy that – based on service orientation (lifecycle management or operational efficiency) and business model scheme (ownership-based or access-based) – classifies manufacturers' approaches to sustainable servitization into four distinct categories, which differ fundamentally in their sustainability tactics and underlying resource requirements. We also investigate how these categories resonate with practice by analysing the cases of three manufacturers of industrial equipment that have embarked on a sustainable servitization journey. By proposing our taxonomy and unpacking each of the four approaches, we provide granular insights into what it takes for a manufacturer to integrate a sustainability perspective into its servitization strategy. This granular analysis is important as it adds depth and nuance to the understanding of sustainable servitization implementation, which would otherwise be overly simplistic and inaccurate. We also identify that resource requirements and customers’ strong focus on economic benefits may introduce core rigidities and act as barriers to the widespread adoption of certain approaches. For managers, the study may help think through how to enhance and evolve service businesses in ways that contribute to environmental sustainability, and what resources to activate to support a sustainable servitization orientation over time.