Within this paper we explore transition paths firms can take to become product service system (PSS) innovators. Applying the dynamic capability approach we study how three firms have developed PSS innovations in the mobility sector (Car2Go by Daimler AG, Connect by Hertz by The Hertz Corporation, Better Place). We explore the different paths the firms have taken originating from different capability sets. Based on semi-structured qualitative interviews with project managers of successful PSS innovations we propose a framework that incorporates three major transition paths. We derive propositions for necessary capability sets for different firm types, the sequence of necessary capability sets along the innovation process and discuss different types of environmental gains realized through PSS.
