Servitization and organizational resilience of manufacturing firms: Evidence from the COVID-19 outbreak

Abstract

This study examines how service-oriented business model diversification of manufacturing firms (i.e., servitization) has affected their organizational resilience during the COVID-19 outbreak. We investigate the impact of two types of servitization – product-oriented vs. customer-oriented services – on organizational resilience. Using secondary data collected from 1,914 manufacturing firms listed in the US stock markets, we find that servitization is inversely related to organizational resilience during the COVID-19 disruption; that is, manufacturing firms with more revenue from service businesses endure more significant stock price loss and take longer to bounce back from the loss caused by the COVID-19 disruption. The impact is more pronounced for manufacturing firms providing product-oriented services (than those providing customer-oriented services). This study extends the understanding of the dark side of servitization relating to organizational resilience during a major disruption.