The interplay of product modularity, service types, and servitization depth on firm performance: a moderated mediation model

Abstract

The servitization literature has explored the role that product modularity plays in supporting service design and delivery. Importantly, product modularity has the potential to aid manufacturers in providing customised solutions on a larger scale, thereby strengthening firm performance. However, despite the prospective benefits of product modularity, manufacturers also need considerable servitization depth, which comprises service orientation, resources, and delivery systems, to provide services in a cost-effective manner. Taking this into account, the study both theoretically articulates and empirically tests relationships among product modularity, servitization depth, service types, and firm performance, employing a moderated mediation model. Using survey data collected from 204 manufacturers in the UK and German, the findings indicate that product modularity exerts a positive influence on firm performance, with servitization depth acting as a mediating factor. The mediation effect of servitization depth on the correlation between product modularity and firm performance was found to fluctuate based on the service types offered by the manufacturer. This study adds to the existing literature on servitization and the role of product modularity and servitization depth in achieving superior firm performance.