Purpose – The purpose of this master thesis was to extend the understanding of the capabilities needed to enable the organizational transformation required throughout the servitization process. This research aims to identify what capabilities for servitization were important for the case company and understand how these capabilities were developed by adopting a dynamic capability perspective.

Methodology – This research adopted a single-case study design to collect and analyze in-depth information about the interviewee’s experiences and perceptions about the case company’s servitization process.

Findings – This research developed a holistic set of capabilities for servitization which were critical for the case company to enable organizational transformation within the context of product-oriented servitization. Four main capabilities for servitization were uncovered Strategic Alignment, Customer Relationship, PSS Innovation, and PSS Delivery. Moreover, a framework was created dividing the capabilities into higher- and second-order dynamic capabilities, hence explaining the importance of dynamic capabilities for the development of capabilities.

Theoretical Implications – This study extended the understanding of capabilities for servitization by mapping them within the context of the case company. This research also displayed the role of high-order dynamic capabilities as the case company’s capacity to transform and manipulate the organization with the purpose to build second-order dynamic capabilities; therefore, denoting a capability hierarchy by which to distinguish between high- and second-order dynamic capabilities within the context of servitization.

Managerial Implications – This research provides managers with a comprehensive collection of capabilities to take into consideration when formulating or executing strategy within the context of product-oriented servitization. Additionally, the distinction among high- and second-order dynamic capabilities for servitization may provide servitizating manufacturers with a new approach to map, organize and prioritize capability development based on the understanding of their function and related micro-foundations.