CUED Publications database

Escaping the commodity trap: Towards service innovation

Lütjen, H and Schultz, C and Tietze, F (2015) Escaping the commodity trap: Towards service innovation. In: R&D Management Conference, -- to --, Pisa.

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Many firms operate in commodity markets such as metals (e.g. iron, silver or gold), foods (e.g. wheat, sugar, salt) or fuels (e.g. oil, natural gas, electricity), which are commonly characterized by high volume products that hardly differentiate against competitors. However, often even high- margin products such as cell phones, video games or computers evolve into commodities. Hence many firms try to avoid the “commodity trap” and choosing innovative service offerings as a relevant strategy to cope with declining margins in hardly differentiated markets. Accordingly, the aim of this study is to develop a conceptual framework for categorizing different innovation strategies, when firms escape the ‘commodity trap’ and shift to services with a particular emphasis on commodity provider. The investigation identifies a continuum of four strategy types that commodity companies employ: Conservatives, Value Creators, Learners and Mavericks. Data was obtained from 17 semi- structured interviews with municipal utilities in Germany, which either change their corporate strategy towards services or continued their strategic orientation on commodities. Therefore, this study systematically investigates organizational and environmental contingencies to analyse why firms decide for a certain innovation strategy. With respect to the explorative nature of this study, we follow a qualitative inductive research approach.

Item Type: Conference or Workshop Item (UNSPECIFIED)
Depositing User: Cron Job
Date Deposited: 17 Jul 2017 20:08
Last Modified: 18 Feb 2021 18:02