Recent trends in manufacturing industries, is the movement of firms towards providing industrial services or product-service systems (PSS). Importance of this phenomenon has been acknowledged as imperative for strategic differentiation, maintaining competitiveness, increase profitability and be environmentally sustainable. Although a lot of studies have focussed on the benefits of PSS provision, yet very less is know about the challenges of such transition, especially at the functional unit level within an organsiation. Our study focusses on the R&D unit and the various role conflicts that emerges as the function of the unit moves from being based on legal structure to that based on collegial authotiry in the PSS transition process. In a cross-case analysis of large manufacturing companies involved in PSS transition, we identified how role conflicts occur at the organisation, unit and intra-unit levels. Our findings contribute to role conflict literature and in the context of PSS and R&D units. We also observe that role conflict operates not just at the individual member level but at various levels within the organisation and the R&D unit, which has not been observed previously. We contribute by showing that an understanding of these challenges can be the differentiating factor for successful implementation and managing transition towards PSS that have been previously neglected in PSS and R&D literature as well.