Our study primarily involved a survey of 352 Small-to-medium-sized enterprises (SMEs). On this page, you will find a comparison of SMEs following six different business models based on key characteristics
The sample consists of 42 micro enterprises (1-9 employees), 158 small enterprises (10-49 employees), and 152 medium-sized enterprises (50-249 employees). It is evident that servitization, whether digital or not, is predominantly embraced by small and medium-sized enterprises, highlighting the relationship between servitization and scale. Moreover, most micro enterprises are "pure product" providers, with only a small fraction adopting a (digital) servitization business model. This suggests that micro firms may lack the resources to invest in services. Additionally, the shift from an "Add-on" to a "Platform" business model corresponds to an increase in the proportion of small enterprises at the expense of medium-sized firms. This might be because, comparatively speaking, the tangible product is much more central to the offering associated with an ‘Add-on’ business model than it is for a ‘Platform’ business model, where intangible features such as digital services and software are more important. Consequently, smaller and innovative firms from specific industries may find it easier to adopt such business models.
This boxplot compares the age distribution of SMEs based on their primary business models. The boxplot includes important statistics such as the mean, median, and interquartile range for each business model. The data reveals that SMEs adopting a 'Platform' business model tend to be relatively younger. This indicates that platform providers are often youthful, entrepreneurial entrants who offer innovative value propositions centered around digital services and software rather than tangible products. Conversely, older SMEs appear to remain focused on pure product offerings without incorporating services. This raises the question of whether this choice reflects a deliberate strategy with positive outcomes or is a result of limited resources and capabilities that may negatively impact SME performance.
Governments represent a small fraction of the customer bases for all SMEs, while the consumer market remains the primary target for most SMEs regardless of their chosen business model. However, in relative terms, SMEs adopting a 'Usage-based' or 'Solution-oriented' digital servitization business model are more likely to serve business customers in addition to their consumer base compared to SMEs following other business models.
Nearly 40% of SMEs specializing in tangible goods belong to the construction industry, as the nature of their products may not lend itself well to adopting more complex business models. In terms of digital servitization, approximately 20% of SMEs in each of the four models operate in the Information Technology industry. Additionally, the consumer goods industry is a common domain for digital servitization business models. Notably, almost 40% of SMEs following a 'Platform' business model come from this industry. These SMEs may be innovative companies offering a unique platform for consumers to engage in buying, selling, and accessing goods and services.
SMEs embracing digital servitization models exhibit higher digital maturity than 'pure product' providers and ‘just servitized’ SMEs. Variations in digital maturity are observed among the different digital servitization models as well, with SMEs following 'Add-on' models being less digitally mature than those adopting 'Usage-based,' 'Solution-oriented,' or 'Platform' models. While no causal relationship can be established, the association between digital maturity and the choice of advanced digital servitization models is noticeable. This suggests that a certain level of digital maturity is likely a prerequisite for SMEs to transition to more advanced business models.
SMEs adopting digital servitization business models, specifically 'Usage-based,' 'Solution-oriented,' and 'Platform,' tend to have higher levels of Business Model Innovation (BMI) This is particularly the case when compared to 'pure product' providers and servitized SMEs that have not embraced digital servitization. While causality cannot be established, the graph implies that higher BMI, as a firm capability, promotes the transition towards digital servitization.
SMEs that have embraced digital servitization, particularly the 'Usage-based,' 'Solution-oriented,' and 'Platform' models, demonstrate better financial performance compared to SMEs following other business models. Notably, SMEs with a 'Platform' business model perform significantly better than both servitized but non-digital SMEs and those with an 'Add-on' business model, suggesting systematic performance variations even within digitally servitizedSMEs.
These performance differences are important, and our analysis attempted to explain them by identifying specific configurations of contextual and organizational conditions that contribute to the superior performance of SMEs across the six business models.
Check out the ‘Outputs’ page to see what we found