A core challenge for broad adoption of the Internet of Things (IoT) is to ensure that its benefits are captured by a wide range of stakeholders. Taking a business network perspective, this study: i) examines the benefit potential of widespread IoT-based digitalization and service innovation; ii) identifies key barriers to capturing these benefits; iii) develops recommendations to overcome these barriers. A three-stage qualitative methodology (based on interviews, a focus group and Delphi-based inquiry) examines the case of an emergent IoT-based digital business network in the UK road transport industry. The research reveals the critical importance of managers involved in digitalization initiatives balancing their interests with those of the wider business network, if the potential benefits are to be captured. It provides fresh insights into: i) IoT-based digitalization as a business network phenomenon; ii) the interplay between digitalization and innovation in the sphere of service business models; iii) digitalization’s disruptive impact on ‘traditional’ industries and the implications for future management research.