Adaptation of service innovation in motorsport-driven manufacturing SMEs

Research into the role of service innovation in manufacturing firms has grown in recent years. However, the way in which manufacturing firms manage and develop service innovation along with their existing offerings and production capabilities remains an uncharted territory. This research attempts to fill this gap by investigating how manufacturing SMEs adapt service innovation by examining the interrelationship amongst business models, service-products and service-processes. A multiple case study methodology is used to ascertain the relationship between those variables, and nine UK-based manufacturing SMEs operating in the motorsport industry are selected for data analysis. By analysing business trajectories of case companies, three transitional patterns of business models are identified: firms that remain as a manufacturer, firms that transit from a service provider to a manufacturer, and firms that remain as a solution provider. Based on their business model, the results reveal interesting insights on the changes and characteristics of their offerings and service-products, and the management of service-processes in relation to their business and manufacturing strategies. Findings indicate that there is a fundamental difference in the companies’ perception of service innovation dependent on their core business, which also affects the range and types of service-products that each company is offering. In contrast to the exsiting literature that suggests the isolation and/or separation of a service unit as an essential step for manufacturers to be successful in service innovation, findings from our case research show that service-processes are regarded as complementary to or interdependent with manufacturing processes, and co-development of both production and service capabilities is regarded as a key for success.