Business Model Choice for Heavy Equipment Manufacturers

Philippe Blaettchen (), Niyazi Taneri () and Sameer Hasija ()
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Philippe Blaettchen: Bayes Business School (formerly Cass), City, University of London, London EC1Y 8TZ, United Kingdom
Niyazi Taneri: University of Cambridge Judge Business School, Cambridge CB2 1AG, United Kingdom
Sameer Hasija: Technology and Operations Management, INSEAD, Singapore 138676

Operations Research, 2024, vol. 72, issue 6, 2263-2278

Abstract: Technological advances enable new business models for heavy equipment manufacturers wherein customers access equipment without ownership. We seek to understand the profitability and environmental performance of different emerging business models in light of salient economic and operational factors. We develop a game-theoretic model to identify the optimal choice between a traditional ownership-based business model and two access-based models: servicization and peer-to-peer sharing. After-sales services, equipment characteristics, usage environments, and fuel prices affect this choice. We also provide a novel framework to analyze business models’ environmental impact, which incorporates trade-offs between economic value and environmental costs and shows that all models may create win-win situations for the manufacturer and the environment.

Keywords: Operations and Supply Chains; business model innovation; environmental impact; sharing economy; after-sales; durable goods (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:inm:oropre:v:72:y:2024:i:6:p:2263-2278

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