Role of supply chain integration in the product innovation capability of servitized manufacturing companies

Abstract

Scholars, managers, and policy makers are increasingly interested in the potential of servitization to enhance the innovation capabilities for manufacturing companies, among others. Collaboration within the supply chain appears to play a relevant role in the transition to service provision because of its relational character. Combining these elements in the same model, this study sheds light on the relationship between innovation capabilities and integration levels, both internally and externally with customers and suppliers, considering the level of servitization in different firms. Using partial least squares structural equation modeling (PLS-SEM) on a sample of Basque manufacturing companies, this study reveals significant differences between manufacturing companies with low- and high-level services regarding the impact of customer integration on product innovation capability. The same result was not found for other supply chain dimensions—internal and supplier integration. These findings can be related to the prominent role of customer relationships and contacts in developing innovation capabilities in manufacturers’ services considered by some previous research. In addition, by analysing the different dimensions of supply chain integration separately, internal integration was found to be an enabler of external integration.