A Theory of Services in Products Industries

Even though services have become increasingly important for firms in many product industries, there lacks theory to explain under what conditions services should be important to product firms. We propose that services embody the product and marketrelated knowledge that transfer between the producer and customer in activities associated with selling, financing, using, maintaining, and repairing products. Building on the knowledge management and innovation literatures, we propose that the level and type of services provided within a product industry are associated with uncertainty, complexity, and competitive dynamics. Finally, we explore the implications for research in resource capabilities, industry verticalization, and technological change.