Effect Of Servitization Research Articles

Servitization and firm productivity premium across the product value chain: evidence from Russian manufacturing firms

PurposeThis paper aims to discuss the firm productivity premium for servitized firms. It discusses servitization across the product value chain and estimates the effects of the range and extent of servitization on productivity premium in manufacturing firms.Design/methodology/approachThis paper develops a conceptual framework and tests the hypotheses on the effects of servitization on productivity premium using linear regression models with a sample of 20,837 Russian manufacturing firms gathered from the Ruslana Bureau van Dijk database and the Russian customs service.FindingsServitized firms exhibit higher total factor productivity and labor productivity. The labor productivity premium increases with the number of services offered. However, the impact of services on productivity varies along the product value chain: postmanufacturing and postsales services enhance productivity premium, while manufacturing and back-office services diminish them. The effect of establishment services remains ambiguous.Practical implicationsThis paper offers an analytical framework for firms to assess their servitization strategies. These strategies should be gradual, focused on enhancing firm efficiency rather than being an end goal. Firms should initiate the process by introducing services at the postproduction and postsales stages of the product creation chain to achieve productivity premium.Originality/valueThe paper extends the evidence on firm-level productivity drivers and contributes to the servitization theory. A servitization strategy should be portfolio-based, considering both the potential gains and losses in productivity resulting from the implementation of specific services.

Effect of servitization on performance in manufacturing firms: A mediating effect model of digitalisation moderated by ESG performance

Servitization and digitalisation are current trends in high-quality sustainable development in manufacturing firms. To clarify how manufacturing companies can improve their environmental, social, and governance (ESG) performance through servitization and digitalisation, this study develops a moderated mediating effects model for analysis and further investigates corporate heterogeneity. This study uses the CSMAR and WIND databases and official website of the National Bureau of Statistics of China to obtain relevant data from 2013 to 2020. Python software was used to crawl corporate annual report data from the CNINFO Website for collation and analysis, obtaining a total of 1261 companies with 9379 sample values. The findings are as follows: (i) Servitization of manufacturing enterprises can significantly enhance their performance. (ii) The service-oriented transformation of manufacturing enterprises can significantly enhance their performance through digitalisation. In contrast to the capabilities of the practical application of digital technology, digital transformation primarily manifests itself as the capability of digital underpinning technology and the practical application of digital technology. (iii) The ESG performance of companies can positively regulate the promotion of service-oriented manufacturing enterprises towards digital transformation, as well as directly foster the development of digital transformation in the manufacturing industry. When examining the individual components of ESG performance, environmental and social performance have a positive effect on regulating the promotion of service-oriented manufacturing towards digital transformation and directly driving the digital transformation of manufacturing companies. However, the governance performance does not have a significant effect. Additionally, environmental performance can restrain the positive effect of digital transformation on performance in manufacturing companies. (iv) Manufacturing companies in the eastern part of the country are improving their performance mainly by promoting digitisation, whereas those in the central and western regions are improving their profitability mainly through servitization. This study reveals the mechanism of ESG performance and the role of servitization and digitalisation of manufacturing companies on performance and suggests new paths for the development of corporate sustainability strategies.

Impact of Manufacturing Servitization on Factor Productivity of Industrial Sector Using Global Value Chain

The current study estimates the impact of manufacturing servitization on industrial productivity from the perspective of global value chain division. For this purpose, from 2000 to 2014, the study uses the World Input–Output Database (WIOD) to measure the servitization level of China’s manufacturing industry based on the non-competitive input–output model. Moreover, it develops a unified framework of source and structural differences in service factors and explores the mechanism and impact of manufacturing servitization on industrial productivity from the perspective of global value chain division. The results showed that if the division status of the manufacturing industry in the global value chain is higher, there will be a higher productivity effect of servitization. Regarding service factor country difference, foreign service factor input positively strengthened the industrial productivity effect, whereas domestic service factor input had no obvious effect on industry productivity. Furthermore, it was found that distribution and transportation services do not play a significant role in promoting industry productivity, whereas modern service factors such as information technology, finance, and business services have significant driving effects on industry productivity. The study suggests optimizing the layout of the industrial chain and improving the servitization of the manufacturing industry.

The Double-Edged Sword of Servitization in Radical Product Innovation

Although servitization literature has identified the difficulties in combining products with services to improve firm performance, it has offered limited insight into the effects of servitization on radical product innovation performance. To address this gap, in this study we investigate how servitization affects radical product innovation performance through latent needs identification. Based on organizational knowledge creation theory and social structural embeddedness theory, we proposed four hypotheses and tested them with data from 208 Chinese manufacturing firms. The results show that servitization enables a firm to identify latent customer needs, and thus helps the firm to exploit more radical product innovation opportunities. However, a high degree of servitization can lead to an overembedded customer relationship, which reduces the firm’s willingness to capture such opportunities. Furthermore, we find that the overall effect of servitization on radical product innovation performance is inverted U-shaped. Our findings enrich the servitization literature by identifying two roles of servitization in radical product innovation performance.

Should everybody be in services? The effect of servitization on manufacturing firm performance

AbstractThe servitization of the manufacturing sector refers to the evolution of manufacturers' capabilities to offer services as complements to or substitutes for the goods that they produce. A vast literature has described these strategies and has shown that this phenomenon is widespread and growing in most developed economies. However, very little systematic evidence of the extent or consequences of servitization based on a comprehensive data set of firms exists. In this paper, we provide such evidence using exhaustive data for French manufacturing firms between 1997 and 2007. We find that the vast majority of French manufacturers sell services in addition to producing goods. The shift toward services is growing steadily but at a slow pace. We also estimate the impact of servitization on firm performance. Controlling for various sources of endogeneity bias, our most conservative results show that firms that start selling services increase their profitability by 0.4%, their employment by 2.1%, and their total sales by 0.6%. For small businesses, we also find a positive impact on the production of goods. We also uncover strong heterogeneity across manufacturing industries.

An empirical study of servitization paradox in China

There is a paradox experienced by manufacturing firms attempting to servitize that their substantial investment in adding services to the existing product portfolio does not bring expected higher returns. The purposes of this paper are to gain more understanding as to the servitization status in Zhejiang Province of China and the influence of servitization on business performance of manufacturers. We conduct a regression analysis based on 134 listed manufacturing firms in 12 sectors in Zhejiang Province of China in 2012. Our results show that there is a significant positive relationship between servitization and business performance for manufacturing firms in Zhejiang; a U-shape relationship between servitization and profit per capita of firms is identified. In addition, the strategy of servitization is more suitable for larger firms and the effect of servitization in boosting business performance becomes more prominent once servitization has grown beyond certain threshold.