Cultural Barriers to the Transition from Product to Product Service in the Medical Device Industry

Cultural Barriers to the Transition from Product to Product Service in the Medical Device Industry

Linda Ryan (Designing Service for Dementia (DSA) Project, Sligo, Ireland), David Tormey (Department of Mechanical and Electronic Engineering, Institute of Technology, Sligo, Ireland) and Perry Share (Department of Social Sciences, Institute of Technology, Sligo, Ireland)
DOI: 10.4018/ijssmet.2014040103
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Abstract

Manufacturing companies are increasingly moving up the value chain by expanding their value offering to include service components, namely Product Service Systems (PSS). Due to the fundamental differences between the provision of products and services, many struggle to effectively integrate the two into a single cohesive offering. This is particularly true of companies operating in the medical device field as, due to the high level of regulatory requirements and controls, implementation of the ‘soft' components of service provision is difficult. The aim of the research is to facilitate companies to move up the value chain from product to product-service provision. Once identified, barriers can then be directly addressed and overcome, thereby allowing the development of a cohesive PSS offering. This will be achieved by identifying existing cultural barriers in relation to the application of PSS strategy within a product-orientated business. This information can be used to facilitate the application of PSS models with produc-orientated companies. This paper details qualitative research, undertaken with eight product-orientated medical device companies and two service practitioners, which establishes, details and analyses the primary cultural barriers in relation to product to product-service transition. These cultural barriers are further extrapolated through a supporting literature research.
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Introduction

The defining lines between product and service are becoming increasingly blurred (Correa et al., 2007; Graves & Ward, 2007). The importance of services is increasing within manufacturing companies and trends are moving towards a more Product Service System (PSS) approach to business, where both are combined together to provide high customer value. Compared to products, services are generally under-designed and inefficiently developed (Cavalieri & Pezzotta, 2012) and due to the fundamental differences between the production of goods and services, many product orientated companies struggle to integrate the two effectively (Friedli et al., 2005). This can be particularly true in medical device companies as, due to high levels of regulatory requirements and controls, staff are trained to follow strict protocols. As a result, they are often unfamiliar with variable component implementation such as services.

A significant factor in any change of business strategy is the existing corporate culture (MacIntosh & Doherty, 2010; Obloj et al., 2010). Corporate culture is the pattern of shared values and beliefs that help individuals understand organisational functioning, and therefore, provide them with norms for behaviour in the organisation. Organisations with strong corporate cultures are, in general, more successful than companies with weak corporate cultures as staff hold common beliefs and standardised behaviours (Haynes, 2009). The dominant culture significantly impacts on decision making and profoundly affects the character of activities and structure, by shaping how activities are carried out and how the organisational structure will operate (Friedli et al., 2005). This means that effective organisational learning as well as the ability to change Goods-dominant practices and mindsets is needed, but can be difficult. For example, it can be difficult to change things such as an engineer’s inclination for technical features, a salesman’s focus on product sales, or a service technician’s working method for maintenance and repair activities (Kowalkowski, 2010).

Using qualitative methodologies, this study identifies the cultural barriers to the implementation and integration of service components into an existing product orientated structure within Medical Device SMEs. Primary information gathered through company interviews will be used to both support and expand key trends found in the literature in relation to cultural factors. In doing so, cultural barriers to the transition from product to product service provision within the medical device industry will be identified. This can then be used to facilitate companies in the provision of comprehensive product service offerings. To begin, a brief overview of dominant logics and their influence on transitioning from product to product-service provision will be discussed. The methodology used throughout the research will then be provided. The findings of the qualitative research will be detailed, analysed and discussed through a combination of primary quotes and supporting literature. The paper will end with an overview of findings, the resulting managerial recommendations and future work.

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