A Systems Thinking Approach for Modelling Sustainability Impacts and Paradoxes of Product‐Service Systems

ABSTRACT In recent decades, manufacturing companies have increasingly adopted product‐service systems (PSSs) business models combining products and services. PSS solutions aim for greater sustainable performance across the triple bottom line (TBL) dimensions; however, the literature emphasises the significance of accurately assessing sustainability impacts because they may lead to unexpected negative effects. Given this, the study adopts systems thinking and an inductive approach, grounded in an in‐depth case study, to investigate the dynamics of sustainability in PSS configurations. A causal model was developed using causal loop diagrams and integrating life cycle thinking and paradox theory to provide a systemic and comprehensive assessment of PSS sustainability. The findings reveal the key variables and feedback mechanisms underpinning TBL interdependencies in product‐oriented PSS. Product‐oriented services create sustainable value through asset availability, operational efficiency, and longevity, while simultaneously generating tensions related to service efforts, rebound effects, trade‐offs, and hidden environmental and social costs.