The Role of Operational Capabilities and Design Decisions in Collaborative Pay-per-outcome Business Models: The Case of the Finnish Indoor Environment Quality Equipment Industry

Authors

DOI:

https://doi.org/10.54337/jobm.v13i1.8005

Abstract

Purpose: The purpose of this paper is to explore how the operational capabilities for pay-per-outcome business model are deployed in the context of indoor environment. In the past decade, product–service systems have attracted interest from various industries as firms seek new ways to create competitive advantage. The transition towards more advanced services in product–service systems require novel operational capabilities. However, the operational capabilities that have a significant impact on the successful implementation of pay-per-outcome business models have not been studied comprehensively hitherto.

Design/Methodology/Approach:  To address this gap, we deployed a single case study design involving four firms as embedded units of analysis.  The goal of the firms was to provide a range of integrated technologies and equipment designed to monitor, control, and enhance indoor environment by utilizing collaborative pay-per-outcome business models.

Findings: The findings indicated that different key design decisions impact ordinary capabilities. The decision to transfer ownership while retaining operational responsibility creates a hybrid model where control over the performance remains with the firms, but financial and legal ownership lies with the customer. Due to these key decisions, three novel operational capabilities were needed: ‘contracting capabilities towards third parties’, ‘capability to train the usage of pay-per-outcome business models’ and ‘remote support capability’.

Originality/Value: This research contributes to business model literature by empirically identifying the operational capabilities required to implement collaborative

Author Biographies

Veli-Matti Uski, Unit of Information and Knowledge Management, Tampere University

Dr. Veli-Matti Uski is currently working as a Data Business Designer at Solita Oyj, Finland. His research primarily focuses on data-driven business models, business model innovation, capability development and product-service systems. Dr. Uski has participated on various projects including SNOBI (Systematic Development of Novel Business Models) and Future Spaces and his research has been published in journals and conferences, such as Journal of Enterprise Information Management, Journal of Business Models and Product Lifecycle Management .

Sameer Mittal, Institute of Management, JK Lakshmipath University

Dr. Sameer Mittal is currently working as an Assistant Professor at the Institute of Management, JK Lakshmipat University, Jaipur, India. He previously completed his postdoctoral research fellowship from Tampere University, Finland. He also holds a Ph.D. from West Virginia University. His research interests primarily focus on the topics related to the changes in operational practices and business models in manufacturing industries due to the advent of Industry 4.0 technologies, e.g., product-service systems and outcome-based contracts. Moreover, he is also interested in experiential learning approaches in operations management. He has published original research in Journals like Business Strategy and the Environment, Journal of Manufacturing Systems, Journal of Cleaner Production, and International Journal of Production Research and Production Planning and Control.

Prasanna Kukkamalla, Unit of Information and Knowledge Management, Tampere University

Prasanna Kumar Kukkamalla is a recognized researcher. He is currently working as the External Collaboration Manager at F-Secure Oyj, Finland, and as a visiting faculty member at Paari School of Business, SRM University, India. His primary research focuses on business model innovation, MaaS, urban mobility, and innovation ecosystems. He earned his doctoral degree in Business Organization from the University of Girona, Spain. Prasanna has held postdoctoral positions at Laurea University of Applied Sciences, IESE Business School, and Tampere University. His research has been published in California Management Review Insights, Journal of Business Strategy, and Journal of Business Models.

Mia Ala-Juusela, VTT Technical Research Centre of Finland

Mia Ala-Juusela, DSc.(Tech), Senior Scientist has over 25 years of research experience on energy efficient buildings, renewable energy in buildings and the optimal connection of demand and supply of energy in the buildings, also on district scale, e.g., in her Doctoral Thesis (in 2023) about energy positive neighbourhoods. Human thermal comfort and business model planning is often included. Participation in many national and international projects, e.g., as Coordinator of EU-projects STORY (Added value of STORage in distribution sYstems) and IntUBE (Intelligent Use of Buildings' Energy Information). Involved in the Built4People co-operation, which is aiming at people-centric innovation in the built environment that drives the transition towards a sustainable society and economy.

Hannu Kärkkäinen, Unit of Information and Knowledge Management, Tampere University

Hannu Kärkkäinen is Professor of Knowledge Management at the unit of Information and Knowledge Management in Tampere University, Finland. His current research interests include knowledge management and decision making in innovation, digital transformation, and business models and value networks related to novel technologies. He is currently focusing strongly on novel data-driven business models, such as Machine-as a-Service and Pay-per-X business models. He has published more than 150 articles in journals and conferences in outlets such as Computers in Human Behavior, Communications of the ACM, Journal of Big Data, Industrial Management & Data Systems and International Journal of Production Economics, as well as several books and other publications.

Karan Menon, School of Economics, Innovation and Technology, Kristiania University

Dr. Karan Menon is an Associate Professor in the School of Economics, Innovation and Technology at Kristiania University. His research primarily focuses on data-driven business models, product service systems, outcome-based contracts, and value creation for industrial manufacturing companies. Dr. Menon has co-authored several journal papers in high-impact journals, including Futures, Industry and Innovation, and the Journal of Business Models, among others.

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05-05-2025

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