Level Of Servitization Research Articles

A servitization profile of the Construction 4.0

The incorporation of technologies associated to Construction 4.0 is an alternative to innovate conventional services in construction. Nonetheless, little is known about the components of services associated to Construction 4.0 that could be incorporated into conventional construction, in a process called servitization. Therefore, the purpose of this paper is to present a servitization profile of Construction 4.0. To this end, a bibliographic and documental review was performed, gathering data from 262 components of services, or subservices, associated to 15 technologies in websites from 148 companies that offer 38 services associated to Construction 4.0. Results include the characterization of a servitization profile of Construction 4.0 subservices in eight levels: 1) non-digital servitization; 2) data collection; 3) non-autonomous data processing and analysis; 4) modeling and simulation; 5) autonomous data processing, analysis and monitoring; 6) results presentation; 7) autonomous construction; and 8) command. In other words, seven levels of servitization are digital, and one is non-digital. This means that automatic data gathered from a sensor depends on the installation of this device by a fundamental intervention of human expertise. Consequently, a combination of digital and non-digital servitization is needed to enable Construction 4.0 attributes, that could be incorporated into conventional services in construction.

Manufacturer's servitization level and financial performance: the role of risk management

PurposeThe objective of this research is to investigate the impact of offering product-linked services on the effectiveness of risk management and, subsequently, on financial performance.Design/methodology/approachThe investigation is based on an empirical analysis employing structural equation modeling (SEM) and cross-industry and multi-country survey data of 307 companies. The theorization is guided by the information processing theory (IPT).FindingsConsidering the basic and advanced classification of services, the analysis suggests that only the provision of advanced services influences the effectiveness of risk management. Specifically, the provision of advanced services strengthens the preventive dimension of risk management. Surprisingly, the analysis reveals a negative direct impact of preventive risk management on financial performance. Preventive risk management, however, indirectly enhances financial performance by supporting reactive risk management.Practical implicationsFor practitioners, the research suggests a positive impact of servitization in a long term rather than in form of instant financial benefits. The research attempts to highlight the specific role of supply chain risk management (SCRM) through which servitization has a positive impact on financial performance.Originality/valueAlthough there are assumptions about both reduction and increase in risk when manufacturers offer services, the extant literature lacks an empirical investigation on the association between servitization and the effectiveness of risk management. This study addresses the stated gap and offers novel insights into the role of SCRM in the performance consequences of servitization.

Family business, servitization, and performance: Evidence from Portugal

Drawing on the servitization and family business literature, we ask whether family governance improves or worsens performance through servitization. Given the preference to preserve socio-emotional wealth, servitization in family firms presents a double-edged sword. That is to say, a preference to preserve socio-emotional wealth facilitates the development of relationships with service-related stakeholders, but it may also prevent family firms from diluting their socio-emotional wealth through greater service-related collaboration with outsiders. In a sample of 35,329 manufacturing firms (13,755 family firms and 21,574 non-family firms from 2010 to 2018) in Portugal, we find that family firms have lower levels of servitization, and they achieve lower performance through servitization. These findings are robust to alternative performance measures and carry important implications for the servitization and family business literature.

Empirical Analysis of Influence of Furniture Manufacturing Servitization on Industry Performance Based on Big Data

In the era of big data, the furniture manufacturing industry takes digitization and intelligence as its core, and its servitization degree is constantly improving. In this paper, based on input-output table data from major manufacturing countries throughout the world in the period 2000–2014, this study empirically analyzes the impact of servitization on the industrial performance and productivity of the furniture manufacturing industry and finds that servitization level of the global furniture industry is about 20%, showing small growth in the sample period. Developed countries are in the leading position in the process of servitization strategy, and the servitization level among countries is gradually converging. Furniture manufacturing industry does not show a servitization dilemma, and servitization has a positive impact on industry performance and total factor productivity.

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.

Should we cooperate? Game theory insights for servitization

PurposeAn abundance of literature suggests that organisations adopting a cooperative approach achieve greater rewards than those that act in opposition or isolation. An emerging body of work also highlights the multiple actors involved in servitization. Despite this, in some contexts the benefits of servitization are not apparent. This paper examines business relationships in the oil industry and how they affect levels of servitization.Design/methodology/approachA mixed method study employing qualitative and quantitative methods was used to fully explore the context. In the quantitative phase, 48 oil industry specialists responded to a scenario based on game theory. This aimed to determine if the relationships between their respective organisations are cooperative or adversarial. Abduction drove a second qualitative phase. This consisted of a series of semi-structured interviews used to explore the servitization level and influence of servitization on relationships and vice versa.FindingsThe statistical results suggest that all parties used adversarial strategies despite the publicised intent to work cooperatively. The interviews suggested that increasing (decreasing) servitization could increase (decrease) cooperation and, in turn, value co-creation but revealed nuances to this effect. It also adds to our understanding of the darker side of servitization by illustrating the impact of mimetic isomorphism.Originality/valueThe findings add to understanding of the complex dynamics around servitization by showing that it is only at advanced levels of servitization that cooperative behaviour is observed, and base and intermediate levels result in non-cooperative behaviour and thus illustrate the importance of adopting a multi-actor lens to explore servitization.

The double-edged sword of servitization in radical product innovation: The role of latent needs identification

Using survey data from 208 Chinese manufacturing firms, this paper empirically explores whether servitization facilitates or hinders radical product innovation performance. On the basis of organizational knowledge creation theory, we argue that servitization enables manufacturers to identify latent customer needs that are valuable in searching for radical product innovation opportunities. However, according to social structural embeddedness theory, a firm with a high level of servitization becomes overembedded in customer relationships, which prevents it from seizing such opportunities. We integrate these two theories and find an inverted U-shaped relationship between servitization and radical product innovation performance. Our research enriches the servitization literature by identifying and integrating the two roles of servitization for radical product innovation performance.

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

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.

Servitization of manufacturing: survey in the Polish machinery sector

Abstract Servitization in developed countries is an increasingly popular strategy for building a competitive advantage. Its level varies depending on different market conditions as well as between sectors. The Polish economy is that of a developed country, but still, its level of development is slightly lower compared to the most developed countries. The current state of knowledge indicates that the machinery manufacturing sector usually characterises the highest level of servitization in comparison to other manufacturing sectors. To the author’s knowledge, no study on the servitization of Polish manufacturing companies has been conducted. Therefore, the main objective of this paper is to fill the gap by analysing and evaluating the level of servitization in manufacturing companies operating in the Polish market. Aiming to assess whether the Polish manufacturers follow the global trends of servitization, the questionnaire survey was conducted with 150 machinery manufacturers operating in the Polish market. The survey was performed using the Computer-Assisted Telephone Interviewing (CATI) technique between May and July of 2018. The results showed that in surveyed companies, the level of servitization, which was assessed based on a range of the most frequently provided services, was rather low. Although most manufacturers offer services to their customers, these services mostly support their products, and the revenue derived from the services constitutes a comparatively small part of the company’s total revenue. This paper makes two types of contribution to the development of research in the field of servitization. First, the study on the servitization of the Polish manufacturing companies revealed that in a country with the well-developed economy, industrial enterprises still rely on manufacturing rather than service delivery. And the potential for services is not yet recognised. Secondly, the original model for classifying the level of product and service integration in the activity of a manufacturing company is proposed. The model requires empirical verification and further studies. Nevertheless, it stands for a theoretical contribution to the research field of servitization.

Research on the Measurement of Manufacturing Servitization Level in Fujian Province Based on Big Data and Input-Output Table

Under the background of a new round of adjustment and upgrading cycle of global value chain (GVC), manufacturing servitization is one of the important measures to improve the position of value chain. Therefore, this paper bases on the classification of the GVC status of the manufacturing industry in Fujian Province, using its latest data of the input-output table, through the matrix operation analysis of the complete consumption coefficient, concluding the servitization level of manufacturing in Fujian Province is fairly low, among which the manufacturing service input in the high position of GVC is slightly lower than that in the low position of GVC.

A maturity model for the servitization of product-centric companies

PurposeThe purpose of this paper is to contribute to the understanding of the servitization phenomenon of product-centric companies, by identifying the resources, capabilities and organizational aspects needed to successfully deploy a servitized business model (BM).Design/methodology/approachBy adopting a literature-based approach, this paper develops a servitization maturity model (SeMM) aimed at assessing and positioning companies in the servitization journey. The paper also illustrates the model application to two small and medium-sized enterprises (SMEs), a machinery and a forklift truck company.FindingsThe SeMM identifies a set of 85 critical requirements that are used to evaluate the servitization level of product-centric companies, through a specific five-stage measurement scale. The requirements are categorized into: five maturity dimensions (organizational approach, process management, performance management, tools, capabilities) and nine BM Canvas components. The empirical application exemplifies how the SeMM can support managers in identifying and bridging the gaps in their servitization journey.Originality/valueThe SeMM adopts an original bi-dimensional approach and provides an operationalization of the servitization process through the identification of specific critical requirements framed on established BM and maturity dimensions taken from the literature. Moreover, the model responds to a call for research to develop practitioner-oriented tools and guidelines to support the servitization process, in particular for SMEs, and to the need to go beyond to measures of servitization based on indicators about number of services offered or their turnover.

China’s Manufacturing Servitization Level and Its Impact on Enterprise Performance: Model and Empirical Study

To more comprehensively and objectively evaluate China's manufacturing servitisation level, and to further examine the impact of servitisation level on enterprise performance, so as to clarify the inconclusive findings from literature, this study constructs a comprehensive evaluation index system and a fuzzy evaluation model of servitisation level, and carries out an empirical study on China's manufacturing servitisation level and its impact on enterprise performance based on the data of 903 listed enterprises in 29 manufacturing industries in eight provinces and cities in China in 2017. The results show that: servitisation has an obvious metropolitan priority characteristic; high-tech industries are in leading positions in servitisation; there is an inverted U-shaped relationship between servitisation level and both return on equity and return on total assets, and there is a U-shaped relationship between servitisation level and return on personnel; the overall servitisation level of China's manufacturing enterprises is relatively low, and there is much room for development; in terms of human capital investment, the manufacturing enterprises are facing 'servitisation paradox'; for manufacturing enterprises in the servitisation process, relatively concentrated equity rights, the realisation of scale effect and an reasonable capital structure will help to improve performance.

When feature-based production capabilities challenge operations

PurposeThe purpose of this paper is to explore the influence that competitors and supply chain (SC) partners have on firms’ feature-based production capabilities (FBPC). Also, it analyzes the consumers’ customization options, the operational challenges and the need for servitization as a service-operations strategy to bypass the product complexity created through features. The author assesses the impact of FBPC on performance and uses some moderators to explore the operational implications in depth.Design/methodology/approachThe author tests research hypotheses through structural equation modeling using a sample of 172 manufacturing firms. The author analyzes the links existing among constructs and tests the influence of certain operational moderators within the network of relationships.FindingsFBPC are highly dictated by competitors’ and SC partners’ decisions, while servitization is a vital prerequisite to guarantee a valuable customization option. Although operational performance is highly challenged by FBPC, only good consumer experiences with features enhance economic performance. The analysis of moderators reveals that advanced planning systems, vendor managed inventory and distribution requirement planning enable firms to better exploit their operations. Total quality management helps firms to offer higher levels of servitization while reverse logistics needs careful evaluation to balance the trade-offs between higher operational performance and supply structure changes.Originality/valueThis research empirically tests the influence of both competitors and suppliers when firms acquire FBPC. The author investigates consumers’ requests for features and the benefits that servitization can supply when goods become too complex. The author tests how FBPC affect operations as well as the implications for economic performance. Finally, the author searches for moderators to assess the overall economic benefits of FBPC and better appreciate the operational implications.

Exploring the relationship between product-service system and profitability

Over the last few decades there has been a significant change in the economic output worldwide, and services have become more and more important. Manufacturers strengthen their competitive position by relying on service offerings, which has been referred to as “servitization”. A particular research stream within such framework recalls product service systems (PSS) as the integration of products and services to deliver value to the customer. The purpose of the paper is to examine the relationship between PSS categories and profitability. The empirical analysis uses a dataset of 10,051 companies on machinery manufacturing industry drawn from the ORBIS database. The analysis further considers the location of firms and differentiates between the European and BRIC countries. The findings reveal that profitability could be represented by an ideal bell curve if we consider on the horizontal axis a spectrum of PSS with an increasing servitization level. In fact, a higher profitability is expected for those companies offering central PSS categories (Product-Oriented, Service-Oriented and Use-Oriented PSS) in contrast to what happens for Integration-Oriented and Result-Oriented PSS categories which are closer, respectively, to the “pure product” and the “pure service” configurations extremes. Finally, considering the stage of economic development, the choice of offering Integrated-Oriented PSS brings to a better financial performance in BRIC countries, whereas, in the same setting, Use-Oriented PSS choice has a negative impact.

Servitization and business performance: the moderating effects of environmental uncertainty

Purpose To obtain in-depth explanations of the effects of servitization, this paper aims to analyse the benefits and costs at different servitization levels. The authors also investigate the moderating roles of demand uncertainty and technological turbulence on such effects. Design/methodology/approach The authors use the resource-based view (RBV) and transaction cost economics (TCE) to analyse the varying benefits and costs associated with servitization at its different levels and proposes the hypotheses. Then they use the survey data of 239 Chinese manufacturing firms to empirically test these hypotheses. Findings The interplay among service benefits, adjustment costs and coordination costs results in a nonlinear relationship between servitization and business performance. A negative servitization–performance relationship is observed at low levels of servitization as adjustment costs would be dominant. At moderate servitization levels, a positive relationship is observed because service benefits increase substantially and outweigh the increase in adjustment and coordination costs. As servitization levels further increase, coordination costs become dominant and a negative servitization–performance relationship reappears. The study further shows the significant moderating role of demand uncertainty and the insignificant moderating role of technological turbulence. Research limitations/implications This study provides a nuanced understanding of the curvilinear effects of servitization on business performance in response to the calls for detailed insights from quantitative studies. Practical implications The findings provide guidance on the degree to which the manufacturing firm should extend its service businesses based on demand and technological environments. Originality/value This is one of the pioneering empirical studies applying RBV and TCE to examine the varying benefits and costs across different servitization levels. The findings provide insight into the ongoing discussion about “service paradox” and “deservitization”.

Definition of a conceptual scale of servitization: Proposal and preliminary results

The servitization process, i.e. the gradual shift from product-centred value propositions to complex product-service systems offerings, has led many manufacturing companies to modify their business models and internal organization. It is clear that this is a rather short-sighted definition not taking into account how much a company is product or service-oriented, i.e. its servitization level. The idea herein discussed is to formalize the concept of a servitization scale, trying to operationalize the concept of servitization level shared by researchers and practitioners. The goal is to provide a conventional tool to measure or compare the servitization level of different manufacturing companies. To provide a preliminary evidence the possible use of the proposed scale, the paper presents: (i) an in-depth analysis of the servitization level of medium-large size Italian companies in the manufacturing sector; (ii) some examples of possible applications of the scale to support the strategic decision-making process and planning of the servitization process.

Research on effects of input servitization on export technological complexity of manufacturing industry of China

Based on measurement of export technological complexity and input servitization level in the manufacturing industry of China from 2006 to 2015, the effects of onshore and offshore input servitization on export technological complexity of manufacturing industry were discussed based on the panel data model by combining industrial heterogeneity. Results demonstrated that offshore input servitization has significant positive effects on export technological complexity of manufacturing industry and onshore input servitization can inhibit export technological complexity slightly. Input servitization can promote the export technological complexity to a limited extent. All of these influences have industrial heterogeneity.

Servitização: aplicação e avaliação da metodologia TraPSS

As indústrias de manufatura estão sempre em busca de novas formas para se manter competitivas e atender as expectativas de seus clientes. Uma destas formas é através do oferecimento de serviços atrelados aos seus produtos. Essa tendência é conhecida como servitização. A metodologia TraPSS tem como objetivo fornecer suporte ao processo de tomada de decisão de uma empresa que deseja evoluir no seu grau de servitização ao longo do contínuo PSS (Product Service System). O objetivo desse trabalho é aplicação desta metodologia e a sua avaliação. Um estudo de caso foi feito a partir de dados obtidos na literatura de duas empresas: uma de telecomunicações e a outra do ramo automobilístico. Estas empresas já haviam sido objeto de estudo do tema servitização, mas em outro contexto. Constatou-se que o método é plenamente aplicável para os fins pretendidos, desde que seja utilizado de forma prescritiva a partir de uma sequência de etapas lógicas pré-estabelecidas. Por outro lado, concluiu-se também que a metodologia não é simples, e, portanto, não é aplicável a qualquer negócio, não podendo sua utilização ser generalizada, uma vez que sua aplicação é adequada para empresas que possuam modelo de gestão maduro e colaboradores com alto grau de competência técnica e administrativa.

Meta-model of servitization: The integrative profiling approach

This study develops a profiling framework that allows systematic comparison of different value constellations of industrial, service-based business models. Following the systematic review method, 154 research articles on servitization are analyzed using this profiling approach, producing an integrative meta-model of servitization. Three different approaches to represent servitization in studies are identified: 1) end-state models; 2) gradual transition models, and 3) stepwise progression models. These are systematically compared and eight conceptually different, generic value constellations ranging from low to high levels of servitization are identified: products with limited support; installed and supported products; complementary services; product-oriented solutions; systems leasing; operating services; managed service solutions; and total solutions. These form a pattern of servitization showing increases in complexity of the offering and value for the customer as well as changes in operational responsibilities in the value constellations. This approach resolves the gap of conceptual incommensurability’ in the literature by providing a reference against which the different value constellations of servitization can be compared. The meta-model connects the various perspectives, models and terminology into a base line theory of servitization as a process, and enables a systematic comparison of the different empirical studies.

Applying the maturity model concept to the servitization process of consumer durables companies in Brazil

Purpose – The purpose of this paper is to contribute to the understanding of the servitization process of typical manufacturing companies that already provide after-sales services, by identifying the phases and organizational elements that enable the delivery of more services. Design/methodology/approach – A servitization maturity model for consumer durables companies is proposed. Servitization is an evolutionary process based on customer profiling, company profiling, the nature of the service, maturity of the process and process characteristics. The capacity of maintaining organizational relationships among players in the value chain describes the organizational maturity needed to advance towards the next phase. The research has been conducted as an exploratory study, in which four different case studies of consumer durables companies were performed to validate the proposed maturity model and detail each phase and the critical resources needed to become servitized. Findings – Four category levels of organizational relationships were identified: first, company and customers; second, company and production network; third, company and market, in addition to; fourth, the internal relations of the company. Practical implications – The means to evaluate companies that undergo servitization are also presented to provide a better understanding of their placement in the process and guide managers through the next necessary steps of action. Originality/value – The development and application of this model allowed exploring the levels of servitization as an evolutionary process based on the relationships among players in the value chain by gathering, structuring, organizing several critical requirements and highlighting important attributes that must be examined by companies during the servitization process.