Solution business fitness: measuring and managing across business logics

Abstract

Purpose: Firms transforming from a product supplier into a solution provider need to develop entirely new organizational capabilities or re-configure existing ones. This paper aims to conceptualize solution business fitness (SBF) as a construct that captures comprehensively the capabilities necessary for a firm to operate successfully in solution business and investigates how the construct can be measured. Design/methodology/approach: Based on a conceptualization of solution-specific capabilities and SBF, the development of the SBF measurement model followed a three-step procedure: domain specification and conceptual development, qualitative pre-study and quantitative pre-study. The SBF measurement model and its relevance were studied in a large scale longitudinal study using survey data from firm representatives, as well as archival data about the turnover and profitability development of the respective solution providers. Findings: The study empirically validates solution-business-specific capabilities as antecedents of firm performance and shows how different business logics applied by firms give capabilities different importance and impact. Practical implications: Managerially, firms can use the developed measurement tool to assess their current SBF and define the desired target status. When improving the SBF, managers should pay special attention to the business logic of their firm, as the required capabilities are context-dependent. Originality/value: The study is the first to conceptualize and measure SBF and to empirically investigate the moderating role of business logic on the importance of the concept and its elements.