Enhancing green total factor productivity through manufacturing output servitization: A case study in China

Abstract

In the context of the growing environmental pollution and resource depletion caused by traditional manufacturing industries, the need for sustainable and eco-friendly practices has become a critical issue for the upgrading and transformation of the manufacturing industry worldwide. Based on data from listed manufacturing companies in China, which is the world's largest manufacturing country and exhibits significant diversity regarding the ownership, scale and level of enterprises, the impact of manufacturing output servitization on green total factor productivity (GTFP), which is a measurement of economic efficiency that takes into account environmental impacts, is analyzed in this article. The results show that manufacturing output servitization can improve the GTFP of enterprises, and this can be achieved through mechanisms such as increased profitability and innovation capabilities. The positive effect on the GTFP of enterprises in less developed regions is greater than that in developed regions and is more significant for private and foreign-funded enterprises than for state-owned enterprises. The companies that adhere to the Global Reporting Initiative framework for environmental, social and governance reporting experience a more significant positive impact on GTFP as a result of their manufacturing output servitization efforts. This research offers valuable insights into the potential of servitization as a strategy for enhancing GTFP and provides actionable guidance for policy-makers and industry stakeholders seeking to align manufacturing practices with sustainability goals.