A capability perspective on service business development in small and medium-sized suppliers

Existing research suggests three theoretical pathways for service business development. The first pathway involves incremental enhancement of relational value for existing supplier-buyer relationships (Alpha). The second pathway captures financial value-seeking behavior in existing and new supplier-buyer relationships (Beta). The third pathway is a radical leap toward a new value constellation downstream in the value chain (Gamma). Our main research question aims at the exploration of these three pathways with respect to small and medium-sized suppliers. The research design is based on an exploratory study and an in-depth study. The exploratory study was able to replicate these three pathways in the empirical context of small and medium-sized suppliers. The in-depth study explores and describes co-evolvement of the dynamic and operational capabilities of each pathway. The results provide testable propositions that can be used to guide future research. The paper offers a comprehensive framework that will assist researchers in the conceptualization of paths for service business development and in the operationalization of capabilities. For managers, its value lies in a description of the capabilities needed to achieve an incremental enhancement of relational value in existing supplier-buyer relationships (Alpha), financial value-seeking behavior in existing and new supplier-buyer relationships (Beta), and radical leaps into new value constellations downstream in the value chain (Gamma). (C) 2012 Elsevier Ltd. All rights reserved.