Product service systems and business models.

Spring, Martin and Mason, Katy J. (2007) Product service systems and business models. In: Symposium on Procuring Complex Performance, 5th and 6th December 2007, Univeristy of Bath School of Management Operations and Supply Group. (Unpublished)

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Abstract

A technical basis for the definition of services, using the so-called IHIP characteristics, is rejected in favour of one based on institutional arrangements. Mundane Transaction Costs and the notion of qualification are discussed in relation to making services tradable. The evolution of the Business Model concept from e-business to wider usage is briefly reviewed, and its applicability to complex product-service systems considered. Four common elements are identified: the structure of networks; how transactions are made possible; how payments are made; and how information and knowledge are transferred. These ideas are then applied to a case study concerning the offshore subcontracting of engineering design services by Rolls-Royce aero-engine makers. Three themes of analysis are developed: a chain of services; the process of aggregating and packaging work between organisations; and the multiple, ambiguous and dynamic boundaries of the firm.