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Product-Service Systems (PSS) in the fashion industry : an analysis of intra-organizational factors
(2018)
The fashion industry is a vast industry that has grown tremendously over the last decades. This growth causes significant environmental impact since the production of clothes involves high input of energy, water, chemicals and generates great volumes of waste. Even though fashion firms have started to address this challenge by adopting environmental standards, it has turned out that the sole use of eco-friendly material and new manufacturing techniques is insufficient. Instead, sustainable business models are increasingly gaining attention to solve the environmental problems. Offers to rent, swap, repair or redesign clothes are among the most prominent and promising examples. For analytical purposes, these concepts can be assigned to the growing research stream of Product-Service Systems (PSS) that shift the focus from the pure sale of a product toward complementary or substitutional service offers. This decouples customer satisfaction from material consumption, prolongs the garments' lifetime and thus diminishes both material input and appertaining waste. Besides environmental sustainability, PSS imply potential economic benefits for organizations. Particularly in highly competitive industries like the fashion industry, PSS allow firms to differentiate, better compete with cost pressure and mitigate the risk of being imitated by rivels since service is more difficult to replicate. However, fashion PSS are still mainly operated in a niche market by small firms and have yet to be anchored in the mainstream fashion industry.
In recent years the share economy has gained widespread success across different industries. Since small firms and new ventures obtain fewer resources, an increased focus on service allows them to differentiate and compete with cost pressure in traditionally manufacturing based industries. There still is a lack of understanding how these firms manage to successfully shift towards service-oriented business models. This paper adopts a dynamic capabilities approach to examine the particular microfoundations that underlie sensing, seizing and reconfiguring dynamic capabilities of early-stage service firms within a traditional retail market. The context of this study is the fashion industry. It is an ideal setting since it is characterized by severe competition, short life cycles, strong cost pressure and high volatility. There are few but increasing examples of entrepreneurial initiatives that try to compete by providing offers to resell, rent or swap clothes. Qualitative data of five early stage fashion ventures is analyzed. Findings reveal that the ability to develop and maintain long-term relationships is essential. It has also been found crucial to acquire knowledge from external network partners, delegate tasks and share information. Furthermore, skills for interacting with customers and adopting consumer feedback are critical. This study provides empirical evidence of dynamic capabilities of early-stage firms and contributes to knowledge on the factors that facilitate servitization in traditionally manufacturing based industries. For practitioners, the presented microfoundations provide a framework of critical tasks that allow them to develop and maintain a service oriented business model.
Implementation of product-service systems (PSS) requires structural changes in the way that business in manufacturing industries is traditionally conducted. Literature frequently mentions the importance of human resource management (HRM), since people are involved in the entire process of PSS development and employees are the primary link to customers. However, to this day, no study has provided empirical evidence whether and in what way HRM of firms that implement PSS differs from HRM of firms that solely run a traditional manufacturing based business model. The aim of this study is to contribute to closing this gap by investigating the particular HR components of manufacturing firms that implement PSS and compare it with the HRM of firms that do not. The context of this study is the fashion industry, which is an ideal setting since it is a mature and highly competitive industry that is well-documented for causing significant environmental impact. PSS present a promising opportunity for fashion firms to differentiate and mitigate the industry’s ecological footprint. Analysis of variance (ANOVA) was conducted to analyze data of 102 international fashion firms. Findings reveal a significant higher focus on nearly the entire spectrum of HRM components of firms that implement PSS compared with firms that do not. Empirical findings and their interpretation are utilized to propose a general framework of the role of HRM for PSS implementation. This serves as a departure point for both scholars and practitioners for further research, and fosters the understanding of the role of HRM for managing PSS implementation.