Facilitating Servitization in Manufacturing Firms: The Influence of Strategic Orientation

Yu Zhang,Yajuan Wang,Yao Li

doi:10.3390/su132413541

Yu Zhang, Yajuan Wang + Show 1 more

Open Access

https://doi.org/10.3390/su132413541

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Abstract

Servitization has significant implications for the sustainable development of manufacturing, the economy, and the environment. However, it does not always produce returns as the firms expect, which may discourage them from engaging in this transition. In this study, we examine the facilitating effects of two dimensions of strategic orientation (i.e., technology and market orientation) on two types of servitization (i.e., basic and advanced service provision), and further investigate the performance impacts of these servitization types contingent on firm size. By conducting an empirical study, using survey data comprising 210 samples, we confirm that both technology and market orientation are positively related to basic and advanced service provision. Moreover, while they have equal effects on basic services, market orientation is more important than technology orientation for providing advanced services. We also find that, for basic services, these two strategic orientations function independently, whereas they reinforce each other in the provision of advanced services. Finally, the relationship between servitization and firm performance is contingent on the size of the firm. Our results show that small firms can benefit from providing basic services, rather than advanced services, while only advanced services can improve the performance of large firms further.

Highlights

As a response to increased competition and decreased profit margins in the manufacturing sector, manufacturers have been increasingly supplementing products with value-added services so as to differentiate their products and simultaneously generate an additional revenue stream [1,2,3,4]
This confirms that the challenges for servitization vary based on the types of service provision, and that certain resources and organizational characteristics are more suitable than others in a given situation, helping to reconcile some discrepant views in the servitization literature, due to the neglect of heterogeneity in services offered by the manufacturers, and providing empirical support to the servitization typology research
Since servitization has positive effects on the sustainable development of the micro enterprise, the macro economy, as well as the environment, it has been a topic of increased interest to both scholars and practitioners

Summary

Introduction

As a response to increased competition and decreased profit margins in the manufacturing sector, manufacturers have been increasingly supplementing products with value-added services so as to differentiate their products and simultaneously generate an additional revenue stream [1,2,3,4] This trend of servitization, firstly identified by Vandermerwe and Rada in the late 1980s [5], has become a critical source of sustainability, contributing significantly to the long-term development of firms [6,7,8], a resource-efficient circular economy [9], and a healthy environment [10]. Further insights into the key success factors for servitization, and the possible ways of managing it effectively to achieve a rewarding performance, are needed

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