Table 1 Problems that SMEs have to... | Emerald Publishing

Table 1

Problems that SMEs have to address when moving to DS

Problem	Detailed descriptions and relevant references
Financial paradoxes: undergoing simultaneously through a service and digital transformation is risky, investments are not always paid back	Servitization is risky (Gebauer et al., 2005) especially in highly competitive industries (Confente et al., 2015; Michalik et al., 2019) Smaller firms might not reach the minimum scale needed to obtain profits from services and from digital services (Confente et al., 2015; Michalik et al., 2019; Malleret, 2006) Financial results could be negatively impacted by simultaneously moving along the trajectories of servitization and digitalization in unbalanced ways (Kohtamäki et al., 2020; Gebauer et al., 2021) Coordinating the transformations of servitization and digitalization could be harder for smaller manufacturers (Paiola et al., 2022b)
Culture and organization: minor manufacturers struggle to change the product-dominated culture and organization	Manufacturing firms that want to compete with services have to change the company’s culture and develop a more service-oriented mindset (Dubruc et al., 2014; Dahmani et al., 2016) DS requires strategic alignment, appropriate leadership and commitment (Kohtamäki et al., 2020), all things that are not abundant in SMEs (Peillon and Dubruc, 2019) Servitization requires changes to the traditional product-based organization (Hsieh and Chou, 2018; Michalik et al., 2019; de Jesus Pacheco et al., 2019; Hsieh and Chou, 2018)
Limited resources and knowledge gaps: SMEs suffer the changes requested by DS due to their limited resources, capabilities and know-how	New capabilities are necessary for DS (Kohtamäki et al., 2020; Peillon and Dubruc, 2019; Coreynen et al., 2017) Manufacturers need to learn how to design digital services that create value for the customers (Zambetti et al., 2021; Rapaccini and Adrodegari, 2022) Digital technologies such as IoT, cloud computing and data analytics are crucial to deliver smart services (Porter and Heppelmann, 2015; Ardolino et al., 2017; Paschou et al., 2020) Smaller firms usually lack the required know-how for introducing digital technologies (Hsieh and Chou, 2018; Confente et al., 2015; Hernandez Pardo et al., 2013; de Jesus Pacheco et al., 2019*) The smaller the firm, the greater the limitation of resources for technological and managerial innovation (Kohtamäki et al., 2020; Hsieh and Chou, 2018; Peillon and Dubruc, 2019)
Accessing customers’ data: It is not easy to convince customers to share field data from connected equipment	SMEs have a poor reputation as service provider (Confente et al., 2015; Michalik et al., 2019) Customers could be reluctant to connect their equipment and share their sensitive data in exchange for digital services, due to cybersecurity threats and confidentiality concerns (Peillon and Dubruc, 2019) Without access to data from connected equipment, firms cannot generate insights about customers’ needs (Kanovska and Tomaskova, 2018*)
Operational complexity: SMEs can be overwhelmed by the higher operational complexity required by a digital service business	Delivering services is inherently complex for manufacturing firms (de Jesus Pacheco et al., 2019; Michalik et al., 2019; Confente et al., 2015) The complexity of service management could be mitigated by the introduction of dedicated information systems (Baines et al., 2009; Coreynen et al., 2017) In smaller companies, digital innovation and servitization require relevant changes to the operational practices (Turunen and Finne, 2014; Peillon and Dubruc, 2019; Kanovska and Tomaskova, 2018; Kohtamäki et al., 2020; Paiola and Gebauer, 2020)
Business ecosystems: In their journey to DS, SMEs should consider the necessity of establishing and orchestrating new business ecosystems, but their attitude to partnering with other firms is rather limited	The provision of digital services requires numerous actors to collaborate (Bikfalvi et al., 2013; Leminen et al. 2018; Charterina et al., 2016; Wang et al., 2022) Orchestrating business ecosystems for digital services is complex and entail establishing and controlling interfaces and processes of third parties (Confente et al., 2015; de Jesus Pacheco et al., 2019; Michalik et al., 2019) SMEs have limited attitudes towards open innovation (Michalik et al., 2019; Paiola et al., 2013)

Problem	Detailed descriptions and relevant references
Financial paradoxes: undergoing simultaneously through a service and digital transformation is risky, investments are not always paid back	Servitization is risky (Gebauer et al., 2005) especially in highly competitive industries (Confente et al., 2015; Michalik et al., 2019) Smaller firms might not reach the minimum scale needed to obtain profits from services and from digital services (Confente et al., 2015; Michalik et al., 2019; Malleret, 2006) Financial results could be negatively impacted by simultaneously moving along the trajectories of servitization and digitalization in unbalanced ways (Kohtamäki et al., 2020; Gebauer et al., 2021) Coordinating the transformations of servitization and digitalization could be harder for smaller manufacturers (Paiola et al., 2022b)
Culture and organization: minor manufacturers struggle to change the product-dominated culture and organization	Manufacturing firms that want to compete with services have to change the company’s culture and develop a more service-oriented mindset (Dubruc et al., 2014; Dahmani et al., 2016) DS requires strategic alignment, appropriate leadership and commitment (Kohtamäki et al., 2020), all things that are not abundant in SMEs (Peillon and Dubruc, 2019) Servitization requires changes to the traditional product-based organization (Hsieh and Chou, 2018; Michalik et al., 2019; de Jesus Pacheco et al., 2019; Hsieh and Chou, 2018)
Limited resources and knowledge gaps: SMEs suffer the changes requested by DS due to their limited resources, capabilities and know-how	New capabilities are necessary for DS (Kohtamäki et al., 2020; Peillon and Dubruc, 2019; Coreynen et al., 2017) Manufacturers need to learn how to design digital services that create value for the customers (Zambetti et al., 2021; Rapaccini and Adrodegari, 2022) Digital technologies such as IoT, cloud computing and data analytics are crucial to deliver smart services (Porter and Heppelmann, 2015; Ardolino et al., 2017; Paschou et al., 2020) Smaller firms usually lack the required know-how for introducing digital technologies (Hsieh and Chou, 2018; Confente et al., 2015; Hernandez Pardo et al., 2013; de Jesus Pacheco et al., 2019*) The smaller the firm, the greater the limitation of resources for technological and managerial innovation (Kohtamäki et al., 2020; Hsieh and Chou, 2018; Peillon and Dubruc, 2019)
Accessing customers’ data: It is not easy to convince customers to share field data from connected equipment	SMEs have a poor reputation as service provider (Confente et al., 2015; Michalik et al., 2019) Customers could be reluctant to connect their equipment and share their sensitive data in exchange for digital services, due to cybersecurity threats and confidentiality concerns (Peillon and Dubruc, 2019) Without access to data from connected equipment, firms cannot generate insights about customers’ needs (Kanovska and Tomaskova, 2018*)
Operational complexity: SMEs can be overwhelmed by the higher operational complexity required by a digital service business	Delivering services is inherently complex for manufacturing firms (de Jesus Pacheco et al., 2019; Michalik et al., 2019; Confente et al., 2015) The complexity of service management could be mitigated by the introduction of dedicated information systems (Baines et al., 2009; Coreynen et al., 2017) In smaller companies, digital innovation and servitization require relevant changes to the operational practices (Turunen and Finne, 2014; Peillon and Dubruc, 2019; Kanovska and Tomaskova, 2018; Kohtamäki et al., 2020; Paiola and Gebauer, 2020)
Business ecosystems: In their journey to DS, SMEs should consider the necessity of establishing and orchestrating new business ecosystems, but their attitude to partnering with other firms is rather limited	The provision of digital services requires numerous actors to collaborate (Bikfalvi et al., 2013; Leminen et al. 2018; Charterina et al., 2016; Wang et al., 2022) Orchestrating business ecosystems for digital services is complex and entail establishing and controlling interfaces and processes of third parties (Confente et al., 2015; de Jesus Pacheco et al., 2019; Michalik et al., 2019) SMEs have limited attitudes towards open innovation (Michalik et al., 2019; Paiola et al., 2013)

Note:

*Papers that study manufacturers of different sizes, including a significant amount of SMEs