Dynamic capabilities conducive to scaling product-service-systems: How product companies can deal with internal barriers to scaling. The case of Fairphone Easy.

Abstract

Unsustainable business practices have led to dramatic sustainability pressures for modern society in the form of climate change and resource scarcity. A potential solution to meet the challenges of the climate crisis are product-service-systems (PSSs), which are combined product and service offerings that together can fulfil customer needs. Through alternative scenarios of product use can PSSs decrease the consumption of products and therefore hold the promise of delivering economic and environmental benefits. However, to accelerate the sustainability transition, PSSs must reach an increasing number of beneficiaries. While prior literature largely focused on the design and implementation of PSSs, scaling them has only been researched to a minor extent. However, there are only a few examples of upscaled PSSs, which suggests that scaling PSSs is challenging. Therefore, the aim of this study was to investigate how product companies can scale PSSs. It has widely been accepted that scaling PSSs is hindered by internal and external barriers. While external barriers have received large attention in the literature, internal barriers have been less researched. To broaden the understanding of the internal barriers firms face and how they can be addressed, this thesis took a qualitative approach. It studied the case of Fairphone, a Dutch smartphone manufacturer that had recently introduced a sustainable PSS. Adopting the dynamic capabilities (DC) lens, using an inductive coding strategy, the research analyzed 17 semi-structured interviews to identify the DCs conducive to early-stage scaling. By matching the DCs with the barriers they help to address, the study found that some DCs enable product companies to reduce or remove barriers, while other DCs prevent barriers from occurring in the first place. The study identified the combinations of DCs that enable product companies to adopt a service-centered mindset, design fully integrated PSSs, plan and execute the service rollout, reduce operational costs, as well as identify and pursue cost-effective ways for scaling. An interesting finding from the case study is that product companies need to foster sensing, seizing, and reconfiguring capabilities simultaneously, as only in combination can they effectively address the identified barriers. Future research could focus on identifying the DCs that are conducive to scaling more mature PSSs that have already moved from initial experimentation to upscaling.