Managerial challenges when integrating ICTs in established products

Joakim Björkdahl and Mats Magnusson

International Journal of Learning and Intellectual Capital, 2012, vol. 9, issue 3, 307-320

Abstract: By adding information and communication technologies (ICTs) into established mechanical engineering products, the customer value provided by these products can be substantially increased, thereby offering an interesting means of differentiation. At the same time, the specific task of integrating ICTs in established products poses new challenges to management. In order to explore these challenges, an in-depth case study of this type of development has been performed at the Swedish multinational company Alfa Laval. The results from the study indicate that the integration of ICTs has consequences for management, particularly in terms of the handling of technological competences and the reformulation of existing business models. Even though most firms developing and manufacturing traditional mechanical engineering products rely on external providers for the integrated ICT components and systems, they nevertheless need to build up absorptive capacity in order to facilitate coordination. The integration of ICTs opens up new opportunities to create value for customers. However, to realise this value and also allow for the appropriation of parts of it, it may be necessary to change the established way of doing business, in terms of the business models used.

Keywords: ICT; information technology; communications technology; integration; mechanical engineering; engineering products; business models; managerial challenges; established products; customer value; differentiation; Sweden; Alfa Laval; multinational corporations; MNCs; consequences; technological competences; model reformulation; traditional products; external providers; integrated components; integrated systems; absorptive capacity; coordination; value creation; value appropriation; value realisation; change management; learning; intellectual capital. (search for similar items in EconPapers)
Date: 2012
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