Servitization strategies in real estate development: Evidence from Jordan

Servitization strategy has become more popular recently within academic literature. Achieving sustainable competitive advantage, based upon services provision, is claimed to be a viable proposition for modern businesses. A strategic view emerging from the literature is that offering services enables closer and longer-term customer relationships. This relationship directs organizations‘ marketing offerings toward customers‘ needs, and promotes a prompt response to dynamic changes in the business environment. There has, however, been little evidence captured on the application of aspects of servitization within real estate development. Prompted by the expected outcome of a servitization strategy, this research is conducted to investigate servitization in the context of the Jordanian real estate development to identify the prospects and challenges of servitization for the real estate development industry, and to examine the role of servitization as a source of competitive advantage through the lens of the Resource-Based View Theory. A qualitative case study research is adopted, and the principles of the Delphi study have been applied. The research examines eight real estate development companies managing multiple building projects in Jordan. Data was collected from the case studies in incremental multiple stages. The primary data was collected using a series of open-ended questions based on three rounds of Delphi: 42 interviews were carried out in the first round, followed by 23 interviews in the second round and 11 interviews in the third round. The findings indicate that service provision has become an essential element of the real estate development project. The output of the real estate development industry becomes systems of both project components and added services. These systems are the result of servitization strategies in the real estate development industry that shifts its focus from only designing and selling a physical output to delivering systems of services integrated to the project, which together are capable of adding more customer value. The research identifies several types of services, which are used to develop the four categories of servitization in the real estate development industry. These categories are referred to as project-oriented, product-oriented, customer-oriented and service-oriented. The research develops the value chain of servitization strategy and it was found that offering services in real estate development is an incremental process (e. g. based upon circular, iterative and on-going development). Offering basic services such as project-orientated services and product-orientated services adds more value for customers and makes the project more valuable. Providing these basic services has become one of the project performance dimensions to fulfil the market ―order qualifier‖ criteria. However, offering basic services will not ensure competitive success. More advanced services such as customer-orientated-services need to be provided to enhance the project‘s competitive advantage. Offering advanced services tailors the project toward customer needs and enhances customer satisfaction. These advanced services are considered the base of order-winner criteria to win the contract. Still, real estate development projects need to consider the longterm life of a project‘s outcomes. This long-term nature of projects requires service provision that supports project functionality and assures product stability. Offering after-sale services builds customer trust, inspires customer confidence and assures customers of reliable long-term support. It is these system solutions that shape the order-winning criteria. Realizing the important role of services, this research develops a model to put servitization strategy into action in the context of the real estate development industry. The research supports the application of the Resource-based View Theory. Offering services develops distinct capabilities necessary to achieve competitive advantage. This competitive advantage is achieved by ado ting three main aspects; i. offering a comprehensive approach of project-service systems; ii. linking the strategic decisions of service provision to project operations management, and iii. collecting data and information that provide the organization with unique market insights. This research extends existing literature on servitization and its implication for building projects and providing insights to support future decision-makers in providing services in real estate development. Also, the research provides a comprehensive review of servitization strategy in the building sector and a platform base on which more indepth research into more focused topics of the servitization phenomenon could be carried out. Furthermore, the research has potential to contribute to other project-based businesses and develops cross-industry knowledge.