Ecological modernization through servitization: EU regulatory support for sustainable product–service systems

• Date: 01 July 2018
• Author: Janja Hojnik
• DOI: http://doi.org/10.1111/reel.12228
• Published date: 01 July 2018

ORIGINAL ARTICLE

Ecological modernization through servitization: EU regulatory

support for sustainable product–service systems

Janja Hojnik

Correspondence

Email: janja.hojnik@um.si The objective of this article is to analyse, from a regulatory vantage point, the delib-

erations on whether (or to what extent) servitization of the European industry can

contribute to ecological modernization, in which new technology and business

models lead to reduced consumption of natural resources. The article examines how

regulatory institutions, in particular at the European Union level, can encourage

potentials of servitization business models for ecologically sustainable growth. The

article finds that while there are a number of legally binding and soft law frame-

works, mechanisms and initiatives related to sustainability, their impact upon servi-

tized European industry remains to be fully discovered. In the future, it will be

important to move from incentives for resource efficiency and recycling towards

mandatory standards, considering that currently several aspects of the servitization

business trend are not bound by mandatory standards for assuring a green and sus-

tainable industry. The challenge facing Europe will be the ability of Member States

to agree on environmental standards and not to use them as a basis for regulatory

competition.

1

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INTRODUCTION

The Member States of the European Union (EU) and other devel-

oped countries have been witnessing a decades-long decline in

manufacturing together with an orientation shift of their economy

towards services. The 2008 financial crisis convinced policy makers

that (over)reliance on services must be balanced with manufacturing

to prevent future economic crises. To achieve this aim, manufactur-

ing needs to be modernized. This modernization (also called reindus-

trialization or industrial renaissance) is reflected in the so-called trend

of servitization, which refers to the offering of services by manufac-

turing companies, in addition to the product alone, with the aim of

increasing the value of the overall solution for the customer. As

such, servitization intrinsically falls under broader considerations of

ecological modernization

1

(sometimes also referred to as eco-

efficient innovation

2

), providing a formula for the interplay of ecol-

ogy and economy.

The objective of this article is to analyse, from a regulatory van-

tage point, the deliberations on whether (or to what extent) servit-

ization can contribute to ecological modernization, in which new

technology and business models lead to reduced consumption of

natural resources. The article examines how regulatory institutions,

in particular at the EU level, can encourage the potential of servitiza-

tion business models for ecologically sustainable growth. The article

finds that while there are a number of legally binding and soft law

frameworks, mechanisms and initiatives related to sustainability, their

impact on the servitized industry remains to be fully discovered. The

article points out that in the future, it will be important to move

from incentives for resource efficiency and recycling towards manda-

tory standards, considering that currently several aspects of the

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©2018 John Wiley & Sons Ltd, 9600 Garsington Road, Oxford OX4 2DQ, UK and 350 Main Street, Malden, MA 02148, USA.

1

MJ

€

anicke, Preventive Environmental Policy as Ecological Modernisation and Structural Policy

(IIUG 1985).

2

F Tietze and EG Hansen, ‘To Own or to Use? How Product Service Systems Facilitate

Eco-innovation Behavior’, 2013 Academy of Management Conference, Orlando (2013) 30.

DOI: 10.1111/reel.12228

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wileyonlinelibrary.com/journal/reel RECIEL. 2018;27:162–175.