Navigating digital servitization in manufacturing SMEs through value propositions

Purpose The purpose of this study is to understand how manufacturing small and medium-sized enterprises (SMEs) can navigate digital servitization to cocreate value propositions. Design/methodology/approach The present exploratory study interviewed managers from 18 manufacturing SMEs holding managerial positions. The analysis started with a Gioia-inspired approach consisting of first establishing inductive first-order in vivo codes, followed by an abductive coding process based on current literature about cocreating value propositions. Findings The study identified three dimensions of digital servitization that manufacturing SMEs must undergo to transition to digital servitization and create value: (1) value-driven digitalization, (2) workforce-driven digitalization and (3) collaborative-driven digitalization. In these dimensions, entangled drivers and challenges related to customer demand, investments, employees and service platform providers must be addressed. A conceptual framework was developed for how manufacturing SMEs can navigate digital servitization and create value propositions. Research limitations/implications This study's manager-focused interviews may limit insights from an employee perspective. As employees play crucial roles as drivers and challenges in digital servitization, future research should incorporate employee interviews to gain a holistic understanding. While interviews within 18 manufacturing SMEs provide a broader perspective on navigating digital servitization to provide value propositions, they lack the depth that a single case study could offer. Originality/value This research advances the literature by offering insights into how manufacturing SMEs can use value propositions to navigate the three dimensions of digital servitization, including its drivers and challenges.