Service transition: A viable option for manufacturing companies with deteriorating financial performance?

Abstract

When manufacturing firms venture into services, they often do so either in reaction to deteriorating performance or to further enhance their financial position. While extant literature argues that firms are most likely to succeed with strategic change processes out of a healthy position, the majority of manufacturers have started their service maneuver in reaction to deteriorating performance. To date, no empirical studies examine whether a healthy financial situation is a necessary requirement for successful service transition. Drawing on configuration theory and employing qualitative comparative analysis, the present study demonstrates that an increasing focus on services can lead to success for both types of firms. However, depending on their financial situation, firms should tap different resource and knowledge sources to implement the service transition: Whereas healthy companies should focus on customers as a knowledge source, companies in an inferior financial situation need strong links with suppliers to turn their services transition into financial success.