14. Moving from a Product-Based Economy to a Service-Based Economy for a More Sustainable Future

Growth and prosperity of economies have been traditionally linked with the production, distribution, and consumption of tangible goods. However, such product-based economies have been increasingly generating a large amount of solid waste and greenhouse gas emissions. One potential solution to ensure a more sustainable future is for companies to move towards business models that rely less on the transfer of ownership of products and more on the provision of the services that the products can deliver. Switching the base of the transaction from the product level to the service level can restructure the economics of production and consumption and potentially improve both economic and environmental performance. In this chapter, we examine the potential of such a solution from both economic and environmental perspectives. We provide several examples of product-based companies who have successfully transitioned away from product-based business models towards service-based business models. We then discuss opportunities and challenges firms may face when making this transition and the key decisions they will need to make. We conclude this chapter with directions for future research.