Document Type

Dissertation

Degree Name

Doctor of Philosophy (PhD)

Department

Management

Program Name/Specialization

Operations and Supply Chain Management

Faculty/School

Lazaridis School of Business and Economics

First Advisor

Dr. Hamid Noori

Advisor Role

Professor and Laurier Chair Professor in Enterprise Integration and Technology Management

Second Advisor

Dr. D. Marc Kilgour

Advisor Role

Professor in Mathematic

Abstract

In view of the recent trend to prioritize access to a product over ownership, manufacturers may consider switching from selling their product to servicizing. The benefits of the servicizing business model, under which a firm sells the use or functionality of a product rather than the product itself, extend beyond providing firms with new economic opportunities. It is also recognized as a sustainable business model because it encourages firms and customers to be more conscious of product design and consumption patterns, respectively. Although this business model offers opportunities to the environment and the economy, it entails the risks of product misuse and technological obsolescence, as the firm retains ownership of the product. The product misuse and technological obsolescence risks may endanger the benefits that servicizing business model transfers to the economy and the environment. This dissertation explores two possible solutions to address these risks.

In Chapter 2, we develop a behavior-dependent pricing model in which a servicizing firm tracks its customers behavior and provides them with monetary incentives to use the product in a more sustainable way. We aim to investigate whether and when a serviczing firm can leverage adopting the behavior-dependent pricing to decrease product misuse risk. In particular, we determine conditions under which adopting the proposed pricing strategy results in a win-win-win outcome, where it simultaneously increases the firm's profits, improves customers' utility, and decreases the environmental impacts.

Designing upgradable products may help the firm address this risk by making used products, upgraded with the most recent technology, available for servicizing. In Chapter 3, we investigate the economic and environmental implications of upgradability for a servicizing firm. By characterizing the firm’s optimal decisions, we evaluate analytically whether and when it is more profitable for a servicizer to invest in the design and production of upgradable products. We also investigate when adopting upgradable product design strategy is an environmentally sound design strategy as opposed to the non-upgradable one.

In Chapter 4, we investigate the interaction between two product design strategies, upgradable and non-upgradable, and two business models, selling and servicizing. First, we analyze a selling firm's choice of product design strategy, upgradable or non-upgradable. Second, we investigate the interplay between servicizing and upgradability. In particular, we analyse the effect of adopting servicizing business model on a firm’s choice of product design strategy, and then assess the effect of upgradability on the firm’s business model choice. Finally, we examine a firm's joint choice of business model and product design strategy.

The insights provided by these studies help firms to know whether and when adopting the behavior-dependent pricing and upgradable product design strategies assist them to tackle the product misuse and technological obsolescence risks as obstacles for servicizing firms to operate profitably. Our studies also highlight the need for further research on addressing the risks that might undermine the economic and environmental benefits of servicizing and provides a foundation for future studies.

Convocation Year

2021

Convocation Season

Spring

Available for download on Saturday, November 05, 2022

Share

COinS