Reconceptualizing the Service Paradox in Engineering Companies: Is HR a Missing Link?

Many global engineering organizations have gradually shifted away from the provision of tangible products toward the provision of high-value-combined product-service solutions. This business paradigm is purported to represent a key strategic opportunity for such firms, and has attracted the attention of practitioners, consultants, and researchers. However, it has also been recognized that many firms fail to generate increased financial returns, the so-called the “service paradox.” Despite an emerging international research literature which alludes to cultural and human resource challenges, few studies have explicitly explored such issues from a human resource (HR) perspective. Informed by two in-depth case studies of global engineering organizations in the U. K., this paper examines the HR challenges and reveals the complex realities of enacting product-service (PS) strategies in practice. It reveals that even where services have proved profitable, firms may still encounter various HR challenges, and struggle to fully exploit their service strategies. Addressing such challenges may represent a key enabler in delivering integrated product-services in organizations attempting to mesh distinctive engineering and service paradigms.