How to transform organizational routines and capabilities to innovate in digital services? Lessons from the agricultural machinery industry
Abstract
This article analyzes Digital Service Innovation (DSI) processes in manufacturing firms, examining how they transform their routines, capabilities, and strategies to integrate digital product-service systems. Based on two case studies from the agricultural machinery sector, the research identifies three key findings: (i) Manufacturers require organizational adaptations in their R&D and commercial areas, involving multidisciplinary teams and partnerships with technology firms and institutions to co-produce digital solutions. (ii) The transition from physical products to digital services demands functional modularization and the development of dynamic digital capabilities. (iii) DSI processes emerge from ecosystem interactions, where routines of knowledge co-construction and value co-generation redefine business models.
Practical implications highlight the need for:
- Strategic agility to combine internal development with open innovation for solution scaling.
- Outcome-focused approaches prioritizing advanced, user-centered services over traditional machinery sales paradigms.
The cases demonstrate that DSI follows non-linear, iterative paths, with idiosyncratic trajectories that depend on the sociotechnical assemblages configuring them. Consequently, flexible innovation management models are required – models whose strategies are fundamentally grounded in organizational practices of co-producing digital technology solutions oriented toward servitization.
References
Akrich, M., Callon, M., Latour, B., & Monaghan, A. (2002). The key to success in innovation part I: The art of interessement. International Journal of Innovation Management, 06(02), 187–206. https://doi.org/10.1142/S1363919602000550
Baines, T., Ziaee Bigdeli, A., Bustinza, O. F., Shi, V. G., Baldwin, J., & Ridgway, K. (2017). Servitization: revisiting the state-of-the-art and research priorities. International Journal of Operations & Production Management, 37(2), 256-278. https://doi.org/10.1108/IJOPM-06-2015-0312
Callon, M. (2004). The role of hybrid communities and socio-technical arrangements in the participatory design. Journal of the Center for Information Studies.
D’adderio, L. (2011). Artifacts at the centre of routines: Performing the material turn in routines theory. Journal of Institutional Economics, 7(2), 197–230. https://doi.org/10.1017/S174413741000024X
Deken, F., & Sele, K. (2021). Innovation Work and Routine Dynamics. In M. S. Feldman, B. T. Pentland, L. D’Adderio, K. Dittrich, C. Rerup, & D. Seidl (Eds.), Cambridge Handbook of Routine Dynamics (pp. 288–300). Cambridge University Press. https://doi.org/10.1017/9781108993340.025
Eisenhardt, K. M., & Graebner, M. E. (2007). Theory building from cases: Opportunities and challenges. Academy of management journal, 50(1), 25-32.
Ellström, D., Holtström, J., Berg, E., & Josefsson, C. (2021). Dynamic capabilities for digital transformation. Journal of Strategy and Management, 15(2), 272-286.
Feldman, M. S., & Pentland, B. T. (2022). Routine dynamics: Toward a critical conversation. Strategic Organization, 20(4), 846–859. https://doi.org/10.1177/14761270221130876
Huikkola, T., Rabetino, R., Kohtamäki, M., & Gebauer, H. (2020). Firm boundaries in servitization: Interplay and repositioning practices. Industrial Marketing Management, 90, 90-105. https://doi.org/10.1016/j.indmarman.2020.06.014
Kallinikos, J., Aaltonen, A., & Marton, A. (2013). The ambivalent ontology of digital artifacts. MIS quarterly, 357-370.
Kohtamäki, M., Parida, V., Oghazi, P., Gebauer, H., & Baines, T. (2019). Digital servitization business models in ecosystems: A theory of the firm. Journal of Business Research, 104, 380–392. https://doi.org/10.1016/j.jbusres.2019.06.027
Lenka, S., Parida, V., & Wincent, J. (2017). Digitalization capabilities as enablers of value co-creation in servitizing firms. Psychology & marketing, 34(1), 92-100.
Lepratte, L., & Yoguel, G. (2023). Artefacts, routines, and co-production: A pioneering case of artificial intelligence-based health services in Argentina. Industry and Innovation, 0(0), 1–23. https://doi.org/10.1080/13662716.2023.2194241
Lepratte, L., & Yoguel, G. (2024). Co-production, artificial intelligence and replication: The path of routine dynamics. Review of Evolutionary Political Economy, 5(3), 535–558. https://doi.org/10.1007/s43253-024-00134-0
Marić, J., Pejić Bach, M., & Gupta, S. (2024). The origins of digital service innovation (DSI): Systematic review of ontology and future research agenda. Journal of Service Management, 35(2), 141–175. https://doi.org/10.1108/JOSM-12-2022-0404
Narvaiza, L., Campos, J. A., Martín-Peña, M. L., & Díaz-Garrido, E. (2023). Characterizing digital service innovation: Phases, actors, functions and interactions in the context of a digital service platform. Journal of Service Management, 35(2), 253–279. https://doi.org/10.1108/JOSM-12-2022-0401
Opazo-Basáez, M., Vendrell-Herrero, F., & Bustinza, O. F. (2021). Digital service innovation: A paradigm shift in technological innovation. Journal of Service Management, 33(1), 97–120. https://doi.org/10.1108/JOSM-11-2020-0427
Opazo-Basáez, M., Vendrell-Herrero, F., Bustinza, O. F., & Raddats, C. (2024). Guest editorial: Digital service innovation: ontology, context and theory. Journal of Service Management, 35(2), 129–140. https://doi.org/10.1108/JOSM-03-2024-498
Rabetino, R., Harmsen, W., Kohtamäki, M., & Sihvonen, J. (2018). Structuring servitization-related research. International journal of operations & production management, 38(2), 350-371. https://doi.org/10.1108/IJOPM-03-2017-0175
Rabetino, R., Kohtamäki, M., & Huikkola, T. (2024). Digital service innovation (DSI): A multidisciplinary (re)view of its origins and progress using bibliometric and text mining methods. Journal of Service Management, 35(2), 176–201. https://doi.org/10.1108/JOSM-12-2022-0375
Rodríguez, M. A., Lepratte, L., & Rabetino, R. (2021). Dynamic Capabilities as Enablers of Digital Servitization in Innovation Ecosystems: An Evolutionary Perspective. The Palgrave Handbook of Servitization, 181–195. https://doi.org/10.1007/978-3-030-75771-7_12
Rodriguez, A., Lepratte, L., Yoguel, G., & Rabetino, R. (2025). Digital Service Innovation as a co-production of socio-technical assemblages oriented toward servitization. Journal of Enterprise Information Management.
Seidl, D., Grossmann-Hensel, B., & Jarzabkowski, P. (2021). Strategy as Practice and Routine Dynamics. In B. T. Pentland, C. Rerup, D. Seidl, K. Dittrich, L. D’Adderio, & M. S. Feldman (Eds.), Cambridge Handbook of Routine Dynamics (pp. 481–500). Cambridge University Press. https://doi.org/10.1017/9781108993340.040
Teece, D. J., Pisano, G., & Shuen, A. (1997). Dynamic capabilities and strategic management. Strategic management journal, 18(7), 509-533.
Vargo, S. L., Fehrer, J. A., Wieland, H., & Nariswari, A. (2023). The nature and fundamental elements of digital service innovation. Journal of Service Management, 35(2), 227–252. https://doi.org/10.1108/JOSM-02-2023-0052
Warner, K. S., & Wäger, M. (2019). Building dynamic capabilities for digital transformation: An ongoing process of strategic renewal. Long range planning, 52(3), 326-349.
Winter, S. G. (2003). Understanding dynamic capabilities. Strategic management journal, 24(10), 991-995.
Winter, S. G. (2017). Pursuing the evolutionary agenda in economics and management research. Cambridge Journal of Economics, 41(3), 721–747. https://doi.org/10.1093/cje/bex009
Copyright (c) 2026 Deusto Business Alumni
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.
License:
Works published in this journal are available since 2021 under the Creative Commons Attribution-NonCommercial 4.0 International license - CC BY-NC 4.0
. Content prior to 2021 is not covered by the journal's current Open Access policy.
Authors' Rights:
Authors retain copyright over their work published in the Bulletin of Economic Studies and grant the Bulletin of Economic Studies non-exclusive rights to exploit the work for layout, publication, and dissemination purposes. This license allows the Bulletin of Economic Studies to distribute, reproduce, and disseminate the work on its platform and through other media, subject to the conditions outlined in this notice.
Readers' Rights:
Readers may read, download, print, search, share (copy, redistribute, or link to full text), or adapt (remix, transform, and build upon the material) the content, provided that:
- The materials are not used for commercial purposes.
- The original work is properly cited, including the name of the author and the source.
- Any modifications made to the original content are clearly indicated.
Commercial use of the materials is prohibited without the express permission of the authors. For clarity, commercial use is defined as any activity intended for financial gain or involving direct commercial exchange.
Conditions of Use:
The use of content must not infringe the rights of others or be used in a way that could damage the reputation of the author or the Bulletin of Economic Studies.
Responsibility for Content:
Authors are responsible for the content of their papers and the Bulletin of Economic Studies is not responsible for the opinions therein expressed.
More Information:
Open Access, Licensing, and Copyright Policy
.jpg)
.jpg)
.jpg)
