Level Of Servitization Research Articles

Digital transformation, innovation capabilities, and servitization as drivers of ESG performance in manufacturing SMEs

This study investigates the relationship between digital transformation and Environmental, Social, and Governance (ESG) performance in the context of SMEs. Drawing upon Resource Orchestration Theory, this research proposes a theoretical model that examines the direct effect of digital transformation on ESG performance and the mediating roles of innovation capabilities and servitization level in this relationship. PLS-SEM and fsQCA were employed to analyze survey data from 215 SME executives. The results reveal that digital transformation positively influences ESG performance. Moreover, innovation capabilities and servitization level partially mediate the relationship between digital transformation and ESG performance. This research contributes to the literature by proposing and validating a comprehensive model that integrates these constructs, offering actionable insights for SME managers and policymakers to enhance ESG outcomes through strategic digital initiatives. Notably, fsQCA results highlight three distinct configurations of digital transformation components leading to high ESG performance, providing nuanced pathways for SMEs to achieve sustainable development.

Benefit distribution and stability analysis of enterprise digital servitization ecosystems from the perspective of value cocreation

PurposeA digital servitization ecosystem (DSE) is a cooperation model based on the concept of value cocreation. However, capability asymmetry among enterprises can lead to unfair benefit distribution and hinder value cocreation and digital service transformation. This paper aims to investigate the impact of the varying capabilities of enterprises (manufacturers, service providers and digital technology providers) on revenue distribution when these enterprises collaborate on digital servitization transformation. This analysis is performed from an ecosystem perspective to facilitate the stable development of DSEs.Design/methodology/approachThe rise of DSEs has engendered extensive literature, and the distribution of benefits within DSEs is in dire need of new mechanisms to adapt to the new competitive environment. The importance of investment contribution, digital servitization level, digitalization level, risk-taking ability, digital servitization effort level and brand awareness is determined by combining the expert scoring method and the entropy value method to determine different weights for manufacturers, service providers and digital technology providers. The Shapley value is used to design the benefit distribution mechanism for stable cooperation among DSE enterprises, thus providing a more scientific basis for the development of cooperative relationships.FindingsDigital servitization is a collaborative process that involves multienterprise activities, and it is significantly affected by digital servitization level and digitalization level. Moreover, constructing the modified Shapley value benefit distribution mechanism according to the relevant capabilities of digital servitization can promote the stable development of DSEs and value cocreation among members.Originality/valueThe main contributions of this study are as follows: First, it summarizes the stability-influencing factors of DSEs on the basis of empirical and literature research on the demand for enterprise digital servitization capabilities and transformation difficulties, delves deeper into the capability composition and cooperative relationship of DSE members and combines the expert scoring method and the entropy value method to determine the weighting to design the benefit distribution mechanism. Second, it reflects system stability and development by studying the revenue distribution of DSE members, thereby expanding the ecosystem construction and business model transformation of digital servitization in the existing research.

Servitization level, digital transformation, and enterprise performance of sporting goods manufacturing enterprises in China

To identify the effect and mechanism of servitization level and digital transformation on the performance of listed sporting goods manufacturing enterprises in China, we construct an index to measure the degree of digital transformation using data from 31 sporting goods manufacturing firms listed on Shanghai and Shenzhen A-shares and the New Over-the-Counter Market in China. The study uses the proportion of service business income in enterprise operating income to quantify servitization level, by analyzing the semantic expression of national digital economy policy and collecting digital category keywords from enterprise annual reports using crawler technology. Thereafter, we analyze the impact of servitization extent and digital transformation on company outcomes as well as if digital evolution acts as a moderating factor between servitization and company outcomes. The findings indicate that the extent of servitization reduces the outcomes of publicly traded sporting commodities production companies, showing a servitization paradox occurrence. Digital transformation degree has a positive U-shaped impact on enterprise performance and a weak positive moderating effect on servitization level and enterprise performance.

How e-commerce can boost China’s high-quality agricultural exports

IntroductionExport quality improvement is a crucial path for a country or region to climb up the advanced division of labor in the global value chain. For developing countries that have long been at the lower end of the global value chain division of labor, the dominance of agricultural trade is often controlled by international retailers, leading to higher costs of agricultural trade and hindering the upgrading of the quality of agricultural exports. As a traditional agricultural exporting country, China still needs a competitive advantage despite the large scale of its agricultural exports. Currently, e-commerce can provide buyers and sellers with comprehensive transaction information and technical support, allowing them to realize rational allocation of resources and export upgrading. Therefore, studying how e-commerce can promote the quality upgrade of agricultural exports is crucial for China to build a trade power.MethodsThis paper clarifies the mechanism of e-commerce’s theoretical impact on the quality of agricultural exports and then empirically tests it using a high-dimensional fixed-effects model with Chinese customs data from 2000 to 2020 as a sample.ResultsThe results show that e-commerce significantly promotes the quality of agricultural exports in all regions of China, and this conclusion still holds after various robustness tests; the heterogeneity test shows that e-commerce fosters the quality of agricultural exports in eastern China, densely populated regions, and economically underdeveloped regions, especially in the case of heterogeneous products; the mechanism analysis confirms that e-commerce promotes the quality of agricultural exports mainly through the optimization of the agricultural industry chain and supply chain, and the enhancement of the level of servicing. Mechanism analysis confirms that e-commerce improves agricultural export quality mainly through optimizing the agricultural industry chain and supply chain, improving the level of servitization, and docking the demand information of the consumer market, etc. Expanded analysis shows that constructing cross-border e-commerce platforms also significantly improves the quality of micro enterprises’ agricultural exports. This paper enriches the research on e-commerce and agricultural trade.DiscussionThis paper provides an essential reference for constructing a robust agricultural trade country and developing high-quality agriculture. Despite encompassing data up to 2020, in the context of today’s global economic volatility directly affecting agricultural trade, future investigations will broaden the scope to delve deeper into how e-commerce can help countries cope with global economic uncertainty.

Sustainability Amplified: Servitization, Integration and Buyer-Supplier Nexus

This study examines the dynamics of buyer-supplier relationship connectors and sustainable supply chain performance, with the moderating role of the level of Servitization and the mediating role of Supply Chain Integration. A purposive sampling survey conducted by a well-structured questionnaire has been administered through a sample of 120 organizations. The manufacturing industries of Pakistan, including, automotive, textile, chemical, electronics, and pharmaceutical were selected for data collection. Using the theoretical lens of Social Exchange Theory, the outcomes reveal that a positive relationship exists between buyer-supplier relationships and sustainable supply chain performance. The results imply that companies that actively engage in building strong and collaborative relationships with their suppliers are expected to achieve higher levels of sustainability in their operations. Moreover, through a mediated moderating model, supply chain integration and servitization emerged as significant mediators and moderator among buyer-supplier relationships and sustainable supply chain performance. Besides the theoretical contribution, this study offers substantial evidence to policymakers regarding how to improve and reshape their relations to accomplish supply chain integration and enhance sustainable supply chain performance.

The effect of servitising level on firm performance of listed Chinese sporting goods manufacturing companies-With moderated mediation effect.

The global manufacturing landscape is undergoing a profound shift, and the paradigm of service-led industrial evolution has taken on paramount importance. Service-oriented manufacturing has emerged as a pivotal conduit for the transformation and elevation of China's sporting goods manufacturing sector. However, we acknowledge that the current state of service-oriented transformation in this sector is still in an embryonic phase. The nuanced interplay between the level of servitization and its consequent impact on corporate performance, along with the intricate forms of interference exerted by various factors in the process of servitization, are shrouded in ambiguity. This article, which is predicated upon the financial disclosures of China's sporting goods manufacturing enterprises listed on the A-share and New Third Board markets, presents a rigorous investigation. Through the construction of an imbalanced panel dataset covering the period of 2007 to 2022, we embark on an empirical journey examining the intricacies of a moderated mediation model to ascertain the mechanisms underlying the influence of servitization on the performance of sporting goods manufacturing entities. Through this research, we unearth a compelling revelation: (1) Within the cohort of sampled enterprises, an elevation of servitization evokes a modest suppressive effect on corporate performance, thus resulting in the enigmatic "servitization paradox." (2) A total of 29.1% of the servitization impact on enterprise performance is achieved through marketing intensity; that is, there is a partial mediating effect of marketing intensity on the relationship between servitization and enterprise performance. (3) Market power play a negative regulatory role in this relationship, which drives the servitization paradox in sporting goods manufacturing but can also promote the positive impact of servitization on marketing intensity. In addition, with the expansion of market power, corporate servitization does not need to impact corporate performance through marketing activities. (4) R&D intensity negatively affects the relationship between marketing intensity and corporate performance, promotes the inhibitory effect of marketing intensity on corporate performance, and aggravates the inhibitory effect of servitization on corporate performance through marketing intensity.

The role of performance reward discrepancies in driving dealers’ servitization

Although servitization is increasingly popular in manufacturing industries, little is known about how manufacturers can compel their dealers to cooperate with the servitization process to the same degree. Drawing on social comparison theory, we propose that a dealer will adjust its servitization level according to the reward discrepancy, or the difference between its annual reward, allocated by the manufacturer depending on the dealer’s performance in the past year, and the reference level in the distribution network. We empirically test this hypothesis with a unique archival dataset of the dealer network of a major automobile manufacturer and supplement it with a scenario-based experiment as a robustness check. We find a significant association between a dealer’s reward discrepancy and servitization, such that the more the dealer’s reward exceeds (falls below) the average, the more the dealer tends to increase (decrease) its engagement in service relative to sales. The findings are robust, with the average being defined in either the national or local scope. This research offers important implications for managers of both manufacturers and dealers.

A configurational approach to understanding relationship characteristics in differing levels of servitization

In their transition from product-based to value-based offerings, B2B suppliers progress through different levels of servitization. These levels are characterized by the type of offering sold (products, services, bundles, or solutions) and the nature of business interaction (transactional vs. relational). This study sheds light on which configurations of customer-supplier relationship characteristics are associated with specific levels of servitization. Emerging from the theories-in-use concept, the authors build a conceptual framework entailing such characteristics and levels of servitization. To empirically investigate this framework, a survey with 182 industrial salespeople is analyzed using fuzzy-set qualitative comparative analysis (fsQCA). The authors identify equifinal relationship configurations of ‘trust and dependence’, ‘communication’, ‘supplier competence’, ‘customer predispositions’, and ‘price sensitivity’ for 11 different servitization levels. This research extends academia's understanding of servitization by contextualizing when and how different types of offerings are sold. Suppliers can use these insights to better identify the appropriate offering type and business interaction approach for the context in which they are operating.

Servitization of manufacturing and China's power status upgrading of global value network

In the context of the great changes of the global value network pattern, the servitization of manufacturing has become an important strategy for the transformation and upgrading of multinational enterprises. China's manufacturing industry has been in the core area of the global value network, creating a lot of export value, but the quality of development needs to be improved. Especially, the servitization level and structure of China's manufacturing have a great space for development. The servitization level affects the international competitiveness of manufacturing enterprises, and their power status in the global value network depends on their international competitiveness to a large extent. With value-added trade data, inter-country input-output tables and China's industrial economic data, there is a simultaneous equations model in this paper to systematically study the impact of servitization of manufacturing on the upgrading of power status in the global value network. The empirical results show that the servitization level of the manufacturing significantly improves the competitiveness of the export value-added, and then affects its core position in the global network. This is a transmission mechanism with a complete mediating effect. Heterogeneity studies show that both commercial and non-commercial servitization have positive impacts on the status of China's manufacturing in the global value network, but the difference is significant. The distance between service and production, and the development stage of service dominance are the main reasons for the difference. China's manufacturing enterprises should optimize the allocation structure of production factors and strengthen their own service-oriented transformation to improve the core competitiveness, especially in the forms of digital servitization and financial servitization. And the government should innovate public service supply to carry out economic governance.

Measurement of Servitization Level of Manufacturing Industry based on Input-Output

To measure the servitization level of the manufacturing industry in Shaanxi Province and reveal the current situation of the servitization input and output. Based on the input-output tables of the whole country, Shaanxi provinces from 2002 to 2017, the direct consumption coefficient and the complete consumption coefficient are calculated to measure the input servitization level of Shaanxi's manufacturing industry and its subsectors. 56 listed manufacturing companies in Shaanxi Province were selected to measure the servitization level of manufacturing output in Shaanxi Province. The results show that from 2002 to 2017, the manufacturing industry in Shaanxi Province presents a development trend of seeking improvement in stability, but the development of servitization is slow, and the overall input servitization level is not high. The development among manufacturing industry and its subsectors is not balanced, and the gap of the input servitization level is large. The service import rate of manufacturing enterprises is not high, and the servitization level of manufacturing output is in the primary and intermediate stage. Based on those above, from the four points of policy support, optimizing the industrial structure, accelerating the integration and application of internet technology in the manufacturing industry and changing the traditional manufacturing concept, the corresponding suggestions to improve the servitization level of manufacturing in Shaanxi Province is put forward.

Configurations for emerging market firms to achieve a high-level servitization strategy: evidence from Chinese manufacturing firms

PurposeEmerging markets face the developmental circumstances of a weak foundation in both manufacturing and services. Although servitization is viewed as an opportunity to realise industry transformation and upgrading, ways for emerging market firms to implement a high-level servitization strategy is still understudied. This study examines combinations of causal conditions for emerging market firms to implement a high level of servitization.Design/methodology/approachAnchored in the strategy tripod model, this study examines the configurations for implementing a high-level servitization strategy by using fuzzy-set qualitative comparative analysis (fsQCA) and data from the China Stock Market and Accounting Research Database (CSMAR).FindingsThe findings identify three kinds of configurations for achieving a high-level servitization strategy: market-cultivational servitization, competition-driven servitization and government-related servitization. Furthermore, the mechanisms for implementing a high-level servitization strategy differ within the regional marketization level and state-owned equity. Specifically, the improvement of the regional marketization level helps manufacturing firms realise a high level of servitization by strengthening service capacity, and state-owned equity helps firms gain distinctive legitimacy to integrate suppliers and providers into the servitization context.Research limitations/implicationsThe proposed multilevel perspective frameworks enable manufacturing firms in emerging markets to achieve a high level of servitization strategy.Originality/valueThis paper explores the impact of institutional environment, industry conditions and firm-level microfoundations on servitization, therefore providing a reference framework for emerging market firms interested in implementing high-level servitization strategies.

The Management Accounting Usage in Automotive Servitized Companies: An Initial Attempt

Purpose : Prior literature suggests a further exploration on the usage of management accounting (MA) techniques in the servitization context. Servitization is a movement in which companies consciously develop service offerings, which support their products to gain competitive advantage. There are still limited studies of this topic in the context of Indonesian manufacturing companies, thus this paper aims to provide evidence on the usage of MA in servitized manufacturing companies in Indonesia.
 Method : We employed a qualitative approach as well as a preliminary survey to a number of selected managers and accountants from four different automotive companies.
 Findings : The result shows that target costing is very crucial to the automotive manufacturing companies nowadays. We discover that competitive position monitoring, quality costing, integrated performance measurement, and brand management accounting are relevant to company’s strategic position. Therefore, we find the connection between the usage of MA and company’s strategic planning.
 Novelty : From practical point-of-view, our study provides the evidence on the usage of MA in Indonesian servitized-manufacturing business. Also, we build a framework, which represents the relationship between the MA techniques and servitization, that could benefit business through a better understanding about the interconnections between MA usage and servitization level.
 Keywords : Management Accounting; Servitization; Automotive Companies; Indonesia

The Impact of Digital Transformation on Manufacturing Firm Performance

The manufacturing industry has undergone significant changes with digital technology evolving faster and faster, and the integration of digital solutions to improve enterprise performance. Based on the theoretical literature, the theoretical model of the role mechanism of "the degree of digital transformation - the level of manufacturing services - enterprise performance" is constructed by this paper. The study also verifies the impact of digital transformation on the performance of manufacturing enterprises in China and the mediating role played by the level of servitization. The results of this study are of great significance to policy makers and manufacturing companies seeking to improve their performance through digital transformation and servitization strategies.

The impact of manufacturing servitization on consumption-based carbon rebound effect: A global value chain research perspective

This study investigates the causal effect of manufacturing servitization on the consumption-based carbon rebound effect, employing the empirical approach based on the value-added trade and SBM-DEA model. The results show that improving the servitization level will lead to a significant decrease in the consumption-based carbon rebound effect of the global manufacturing industry. Moreover, the main paths through which the manufacturing servitization inhibits the consumption-based carbon rebound effect are the human capital and government management. We also find that the impact of manufacturing servitization is more substantial in advanced manufacturing and developed economies, which is smaller in manufacturing sectors with higher global value chain positions and lower export penetration levels. These findings suggest that improving the level of manufacturing servitization helps alleviate the consumption-based carbon rebound effect and is conducive to achieving the target of global carbon emission reduction.

Servitization in cross-border relationships: investigating the effects of global supply chain dependence on the servitization level of the manufacturers

PurposeServitization is a business transformation that increases service provision in manufacturers. This study aims to empirically examine how a manufacturer's global supply chain dependence and its power positions affect its servitization output.Design/methodology/approachThis study employs secondary longitudinal datasets and econometric specifications to test the relationship between global supply chain dependence and servitization. It further examines the moderating roles of the firm's market power and the degree of being principal customers and principal suppliers. Heterogeneity analyses are performed to verify the robustness of the results.FindingsThe findings indicate that fewer global suppliers and more global customers contribute to a higher level of servitization. The negative effect of global supplier dependence is mitigated when manufacturers have less market power and are the principal customers for most of their suppliers. The positive effect of global customer dependence is stronger when manufacturers have less market power and their customers are less dependent on the manufacturers.Research limitations/implicationsData mixing manufacturing and service inputs and data on public US manufacturers may restrict the generalizability of the findings. Nonetheless, the study urges future research to focus more on other countries/markets.Practical implicationsThis study encourages manufacturers who servitize their businesses to connect with more global customers and fewer global suppliers and manage powers among stakeholders. Other recommendations for policymakers and industry associations are also proposed.Originality/valueThis study is the first to explore the impacts of the global supply chain dependence on servitization. Multiple-level findings offer important implications for researchers and practitioners.

Influence of digital transformation on the servitization level of manufacturing SMEs from static and dynamic perspectives

The servitization transformation is an important strategic planning and development trend for Chinese small and medium-sized enterprises (SMEs) in manufacturing to break through the low-end locking of the global value chain and achieve high-quality transformation and upgrading. Digital transformation is a new expansion and the main focus of technology and service innovation in the process of enterprise servitization. To comprehensively evaluate the development status of Chinese manufacturing enterprises’ servitization level and explore the heterogeneity effect of digital transformation on enterprise servitization level, this study conducts the following research. By analyzing the influencing factors of manufacturing SMEs’ servitization level and the mechanism of digital transformation, this study combines the panel data of SMEs in manufacturing from 2015 to 2020 and evaluates their servitization levels from static and dynamic perspectives using super-efficiency data envelopment analysis (DEA) and Malmquist index methods. Furthermore, this study examines the influence of digital transformation on the servitization level of SMEs in manufacturing by using a digital input index and scenario comparison and analyzes the heterogeneous effects according to industry type. The results show that the servitization level of Chinese SMEs in manufacturing is not high, and its development is not balanced. Digital transformation plays a significant role in promoting the servitization of SMEs in manufacturing. The effect has obvious heterogeneity owing to differences in industry type. The research results can provide countermeasures and suggestions for the digitalization and servitization innovation development of SMEs in manufacturing, which can promote high-quality transformation and upgrading of Chinese SMEs in manufacturing and increase their position in the global value chain.

Supply chain antecedents of servitization: A study in ETO machinery companies

Nowadays, manufacturers are increasingly shifting towards Product Service Systems (PSS) by accommodating servitization. Whereas a fair body of research investigates the effect of servitization on the product supply chain, studies on the impact of the supply chain on the company's service offerings are scarce and reveal controversial results. In this paper, we aim to clarify the latter relationship by studying the impact of three supply chain features on servitization within three Engineer-To-Order (ETO) machinery Small- and Medium-sized Enterprises (SMEs). First, our results reveal that companies located downstream in the product supply chain exhibit higher servitization levels. Second, the level of customization, represented by the position of the Customer Order Decoupling Point (CODP) in the supply chain, and the company's servitization level seem to be unrelated. Whereas it is true that higher product customization, per se, enables companies to offer more services around the product, the operational challenges encountered because of higher customization levels can lead companies to deliberately reduce their menus of services to the customer. Third, higher levels of vertical integration support the provision of basic services because companies have more control on supplies required for services such as maintenance and repair. Companies with low levels of vertical integration cannot provide the speed and responsiveness required for basic services, but can still offer advances services, provided that they engage in strong collaboration with their suppliers. Thus, with this work, we highlight the extent to which product supply chains can support or inhibit the servitization endeavours of ETO companies.

The incentive effect of government subsidies on the digital transformation of manufacturing enterprises

PurposeChina's digital economy is flourishing and playing a pivotal role in the national economy. Government subsidies, as an important tool for the national treasury, are a “reassurance” for the digital transformation of manufacturing enterprises. The purpose of this paper is to investigate the relations between the digital transformation of manufacturing enterprises and government subsidies to provide inspiration for promoting the digitization and upgrading of China's manufacturing industry and facilitate enterprises' innovative development.Design/methodology/approachBased on the panel data of 2,928 manufacturing listed companies in China from 2016 to 2020, this paper empirically tests the effect of subsidies on the digital transformation of manufacturing enterprises using fixed-effect econometric regression.FindingsThe results illustrate that subsidies effectively incentivize digital transformation in manufacturing enterprises, and verify different situations through heterogeneity. Further analysis of the moderating effect shows that the innovation level and servitization level of manufacturing enterprises positively moderated the relationship between government subsidies and the enterprise's digital transformation.Originality/valueBased on Chinese manufacturing enterprise samples, this paper empirically tests the incentive effect of government subsidies on the digital transformation of manufacturing enterprises, therefore clarifying the main regulatory effects. This paper could provide enlightenment for manufacturing enterprises to make good use of government subsidies to improve their digital ability, thereby enhancing competitiveness in the digital economy era.

Servitization of SMEs: Focused on the Electrical Equipment and Metal Parts Manufacturers in South Korea

Servitization is becoming an essential strategy for manufacturers to gain competitive advantage, and several successful cases have already been reported. However, these success stories are mainly studied for large enterprises such as GE, IBM, Xerox, and Rolls-Royce. Therefore, it is difficult to apply the cases to the servitization of SMEs, thus in this study, the status of SMEs’ servitization was examined and the applicability was studied. Among those SMEs, manufacturing of electrical equipment and basic metal parts were selected because they are related to all manufacturing industries. As a research method, companies in the relevant industry were randomly selected and CEOs, managers, and employees were interviewed. Through in-depth interviews, the company’s current servitization status in the perception of different employment levels and new servitization opportunities are analyzed. As a result of the interview, the level of servitization in the industry seems to be very low, and it seems that there are very few new servitization opportunities due to the characteristics of general SMEs, such as lack of capital and human resources. Nevertheless, companies were aware that servitization was necessary for sustainability, and they could confirm their will to take on a challenge if there was an opportunity in the future.

Does servitization of industrial structure adversely affect the quality of economic development? Evidence from China

China is shifting from focusing on speed of economic development to quality development. As the proportion of service industry increases, the impact of servitization of industrial structure on high-quality development urgently needs to be clarified. This paper for the first time uses the panel data of 280 prefecture-level cities ranging from 2003 to 2019 in China, applies the dynamic panel Generalized Method of Moment (GMM) estimation method, employs labor productivity, average wage, and environmental pollution as intermediary variables, and analyzes how servitization of industrial structure affects the quality of economic development. The results show that there is a U-shaped effect for servitization of industrial structure on quality of economic development. The higher the initial level of servitization of industrial structure, the weaker the negative effect for servitization of industrial structure on the quality of economic development. When the initial level of the former is high enough, it can promote the latter. Moreover, the effects differ by region. Furthermore, negative effect of the service-oriented trend of industrial structure on economic development quality is weakened by improving the overall labor productivity and reducing environmental pollution, while it is strengthened by reducing the average wage level. As such, we propose that it is necessary to further promote the rationalization of the industrial structure, promote the optimization of the development of the industrial structure, and to promote the effective allocation of resources.