How do manufacturing companies foster platform ecosystems?

Abstract

Manufacturing companies can transform into platform companies through servitization. Indeed, successful attempts and cases through servitization have been deployed following the product-service system (PSS) scheme. The PSS scheme is classified into several archetypes, and this study considers the two primary archetypes of PSS implementation: K-mode and R-mode. After introducing their structural and characteristic differences (e.g., the strong and weak points), we examine how the manufacturer can organize and govern the platform ecosystem in each mode and present some implications for its platform transition. In particular, we develop stylized ecosystem models consisting of PSS player (PSSP), service partners (service suppliers, SS), and user groups. Then, we construct two-stage game models: PSSP's mode choice and participants' responses. SSs and user groups can each make choices corresponding to cooperation and competition. When cooperation in a specific mode becomes prevalent, it is more likely that the ecosystem in that archetype will be the dominant mode in the manufacturers' platform transition. We will provide analytical results and equilibria comparisons through several ecosystem scenarios in each mode. Our findings will offer strategic implications to manufacturing firms pursuing the leverage of servitization to transform them into new emerging platforms.