Digital Servitization and the Environmental Value Proposition: A Multiple Case Study in the Energy and Building Technology Industry

Abstract

The mounting threats of man-made climate change increase the pressure on business organizations to lessen their impact on the natural environment. This thesis investigates how the disseminating concept of digital servitization can support companies in the energy and building technology industry to transform their business models towards more sustainability, and how this affects the underlying value creation logic. A multiple case study approach was chosen to answer the following research question: “How can a Sustainable Business Model that is built on a digital Product-Service System promote the potential for environmentally sustainable value creation in the energy and building technology industry from a Service-dominant Logic perspective?”. After a literature review on servitization, digital servitization, the service-dominant logic, and sustainable business models, a system dynamics model is used to analyze the secondary qualitative data from four manufacturing companies. The findings are theoretically discussed from a service-dominant logic perspective. Digital product-service systems were found to create direct reinforcing feedback loops between the customer value proposition and the environmental value proposition. The retention of ownership by the provider and digital technologies were identified as driving the reduction of energy consumption during the use-phase of products, closing resource cycles, and making energy-efficient systems accessible to a larger proportion of the market. The service-dominant logic has been assessed as a suitable and necessary perspective on sustainable value creation. Sustainable value is co-created through the resource integration of multiple actors across a service ecosystem, exists as value-in-use as opposed to value-in-exchange, and relies on the knowledge generated from digital data. The thesis contributes to the understanding of underlying mechanisms in business models built on digital product-service systems in the energy and building technology industry and argues for a change in the foundational creation logic of sustainable value. Further research about the suitability of digital servitization for sustainable value creation in other industries and markets is called for.