Value creation from combining digital and non-digital resources: The case of “smart products”

This paper explores value creation from combinations of digital and non-digital resources in business networks. The theoretical lens used here is the Resource Interaction Approach, which relies on the Industrial Network Approach, which asserts that resource combinations across firm boundaries are key to value creation. Additionally, we identify unique characteristics of digital resources: transmissible, reproducible, and reprogrammable. The paper lays out an exploratory in-depth case study involving three actors and their relationships in a traditional manufacturing context. The case follows one of the actor's “smart products,” which combines manufacturing equipment and software based on the Internet of Things and cloud technology; as such, these products build on combinations of digital and non-digital resources in their uses to create value. The paper provides the following typology of different resource combinations involving digital resources: diffusely transmitted, rapidly reproducible, and easily reprogrammable resource combinations. Resource combinations involving digital resources yield three forms of value creation: i) increasing data accessibility and knowledge creation; ii) increasing efficiency; and iii) promoting innovation throughout products' lifespans. The paper concludes by contextualizing the study's theoretical contributions and managerial implications, as well as proposing avenues for future research. • Smart products build on combinations of digital and non-digital resources in their uses. • Different types of value can be created from combinations of digital and non-digital resources in business networks. • Characteristics of digital resources are only meaningful when resources are combined.