Exploring the platformization dilemma: How manufacturers leverage digital platforms for service business model innovation

Recent research has highlighted the growing significance of digital platforms in manufacturing, particularly in driving service business model innovation (BMI). However, research gaps persist in understanding how a manufacturer's platform business configuration as well as its platform experience influence its service BMI capability. This paper addresses these gaps by using the digital platform capability approach as a theoretical framework and introducing the concept of digital platform experience. To conduct our study, we first derive hypotheses from literature and test them in a cross-sectional, three-stage empirical analysis using descriptive, bivariate and multivariate regression analysis. For this purpose, we use the German Manufacturing Survey , a representative, large-scale firm-level database, which encompasses 1334 firms from the German manufacturing sector. Our findings reveal that digital platforms play a central yet ambivalent role – depending on experience and configuration – in manufacturers' service BMI. Overall, moving into the platform business generally triggers service BMI. However, these effects are mostly confined to product-related BMI, while customer-oriented models are only enabled through more complex platform configurations. Notably, these positive innovation effects tend to be short-lived: in the long run, innovation dynamics slow down considerably, and manufacturers may face what we refer to as the “platformization dilemma.”