Servitization Transformation Research Articles

The impact of digital transformation on the servitization transformation of manufacturing firms

In the burgeoning digital economy, the deep integration of the digital and real economies, along with industrial digitalization and service-oriented manufacturing, represent future development trends. Investigating the impact of digital transformation on servitization transformation is paramount for promoting the servitization transformation of manufacturing firms. This paper empirically examines data from listed Chinese manufacturing firms between 2007 and 2021, identifying several key findings. First, digital transformation significantly promotes the servitization transformation of manufacturing firms, a conclusion that remains robust through a series of tests. Second, digital transformation can drive the servitization transformation of manufacturing firms through two channels: enhancing total factor productivity and optimizing human capital. Third, the promotive effect of digital transformation on servitization transformation varies across firms with different ownership structures, technological levels, and scales. This study provides empirical evidence for promoting the high-quality development of manufacturing firms and accelerating their servitization transformation in the digital context.

The impact of servitization transformation on the ESG performance of manufacturing firms

In the new era of green and low-carbon economic transformation, servitization transformation enhances the production efficiency and perceptual capabilities of manufacturing firms and offers a novel approach to fulfilling environmental, social, and governance (ESG) responsibilities. This study employs a sample of Chinese-listed manufacturing firms from 2009 to 2021 to provide a theoretical analysis of the intrinsic mechanisms by which servitization transformation impacts ESG performance, including the roles played by total factor productivity, human capital, and firm goodwill. We then empirically examine the impact and mechanisms by which servitization transformation impacts the ESG performance of firms, finding the following. First, servitization transformation significantly improves ESG performance and this conclusion still holds following a series of robustness tests. Second, servitization transformation enhances ESG performance through the following three channels: improving total factor productivity, optimizing the structure of human capital, and accumulating firm goodwill. Third, the ESG performance of state-owned, high-tech, and large firms is more sensitive to servitization transformation. This study enriches and expands the application of servitization transformation research to manufacturing, providing policy insights that would allow manufacturing firms to better fulfill their ESG responsibilities and promote green and sustainable economic development.

Toward Economic Sustainability: Exploring Business Model Innovation in Servitization Transformation Enterprises through Resource Orchestration

This paper studies the role of resource orchestration in promoting business model innovation in servitization transformation enterprises to achieve sustainable development. Taking Sany Heavy Industry as the research focus, a three-level evaluation index is constructed to identify the resources and capabilities that have a key impact in the process. Through the continuous decomposition and integration of resources and capabilities, the resource orchestration behavior of business model innovation in the process of enterprise service transformation is obtained. The research results reveal the strategic evolution from “acquisition–stabilization–mobilization” to “accumulation–enrichment–coordination”, and finally to “accumulation–pioneering–deployment”, which plays an important role in redefining servitization value creation and transforming business model logic. This research helps to understand how resource orchestration promotes business model innovation in the context of servitization transformation to achieve the sustainable development of enterprises.

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.

Pathways of development of dynamic capabilities for servitization transformation: A longitudinal multi-case study

Servitization is a transformation process requiring manufacturers to develop dynamic capabilities to support the change process and overcome emerging challenges over time. In this paper, we study pathways of development of dynamic capabilities for servitization transformation (the sequence of the development of capabilities and how they work together over time) and how they relate to servitization transformation outcomes. We do so based on six longitudinal in-depth case studies of manufacturing firms which, having departed from similar servitization maturity starting points, followed different capability development pathways in their transformation processes and achieved different outcomes. We found that successful pathways of development of capabilities for servitization transformation are associated with (1) developing (first-order) dynamic service provision capabilities sequentially, following a specific order over time and (2) developing (second-order) dynamic reconfiguring capabilities to overcome challenges and sustain the development of service provision capabilities and the transformation process. Our study contributes to the literature by providing an in-depth understanding of how the pathways of development of dynamic capabilities over time influence the outcomes of the servitization transformation process. It is one of the first studies to unveil in detail mechanisms by which different reconfiguring and service provision capabilities work together over time to facilitate the servitization transformation process.

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.

A Study on the Impact of Institutional Support on the Servitization Transformation Performance of Manufacturing Firms—Based on a Dual Mediation Model of Business Model Innovation and Technological Innovation

The servitization transformation of manufacturing enterprises serves as an important impetus for the current high-quality development of the manufacturing industry. Relying on the institutional-based view, this paper investigates the effect of institutional support on the servitization transformation performance of manufacturing enterprises and the mediating function of business model innovation and technological innovation in the course of this procedure. The study demonstrates that both formal and informal institutional support have significant positive influences on servitization transformation performance, and the active effect of informal institutional support is stronger; institutional support has significant positive effects on business model innovation and technological innovation; and business model innovation and technological innovation mediates among institutional support and servitization transformation performance. This study analyzes the mechanism of the influence of institutional support on the servitization transformation performance of manufacturing enterprises, which thus enriches literature related to servitization transformation in manufacturing enterprises and provides some insight to help managers in manufacturing enterprises perform servitization transformation activities through business model innovation and technological innovation with institutional support.

Re-discussion of servitization strategy and firm performance.

Servitization innovation is critical for manufacturing firms to strengthen their sustainable competitive advantage in a dynamic business environment. Current research on the relationship between servitization and firm performance has matured, but many conclusion remain divergent. That cannot only hinder the development of servitization theory, but also make manufacturers lack a scientific basis for deciding whether to develop servitization. Thus, this study aims to systematically analyze the quantitative research results in this field through Meta-analysis methods to reveal the reasons for the disagreement. After collecting 59 independent articles on servitization and firm performance, this study performed statistical analysis using Meta-analysis. Then, the relationship between servitization and firm performance was explored, as well as the effects of different potential moderating variables. The moderate positive relationship between servitization strategies and their different orientations and firm performance is found. For the moderating variables, the servitization strategy has a more significant effect on non-financial performance. And they are more correlated when there are mediator variables. The impact of firm servitization transformation in developing regions is better than in developed areas. A stable market environment is more beneficial to the servitization transformation. The transformation effect of high-tech manufacturing is better than that of traditional manufacturing. And the transformation effect of large companies is better than that of small and medium-sized companies.

A Fuzzy‐Set Qualitative Comparative Analysis of Factors Influencing Servitization Transformation Performance in Chinese Manufacturing Enterprises

The development of manufacturing industry affects the operation of Chinese economy, and it is necessary to study the possible configuration paths of servitization transformation to support sustainable development. Based on previous studies of manufacturing servitization transformation, it is extended to explore multifactor combinations which affects servitization transformation performance. This paper constructs technology‐organization‐environment (TOE) framework of servitization transformation performance evaluation and uses fuzzy‐set Qualitative Comparative Analysis (fsQCA) method to analyze the key factors and mechanism of servitization transformation with the data of 28 Chinese manufacturing enterprises. The results reveal that the six major factors are not the necessary conditions, and single‐factor cannot effectively promote servitization transformation of Chinese manufacturing enterprises. There are four configurations which can be divided into three paths to improve servitization transformation performance. Based on the results of analysis, it proposes strategies to promote the development of Chinese manufacturing enterprises, such as developing targeted servitization strategies, enhancing technology development, and improving technology applications. The findings reveal the mechanism of multiple factors behind the evolution of manufacturing servitization transformation and take useful suggestions for the high‐level development of Chinese manufacturing enterprises.

Role of Servitization, Digitalization, and Innovation Performance in Manufacturing Enterprises

The structure of the manufacturing industry has forced manufacturing companies to understand the importance of digitalization and servitization transformation, in terms of production and R&D. In this study, we examine the relationship between servitization, digitization, and enterprise innovation performance through the lens of dynamic capabilities within enterprises. We also discuss the impact of the transformation servitization strategy on business innovation, and the mechanisms by which it impacts business innovation performance. The study’s findings indicate that servitization significantly contributes to innovation performance, and digitalization acts as a mediating mechanism between the proposed relationships. Thus, this article argues for the integration and growth of servitization and digitization.

How business model innovation overcomes barriers during manufacturers’ servitization transformation: a case study of two top piano manufacturers in China

ABSTRACT Servitization is important for manufacturers’ strategic transition, yet applying servitization has significant barriers. Business model innovation is regarded as a systematic solution of overcoming the barriers. However, it has been insufficiently studied especially in emerging economies. Therefore, we conducted a multi-case study of two leading piano manufacturers engaging in services in China, and explore the process of business model innovation for their servitization. This study finds that, with the facilitation of dynamic capabilities, manufacturers address the barriers through business model innovation in three elements of content, structure and governance, and finally form a new business model with ambidexterity, in which efficiency-centred theme and novelty-centred theme can coexist, interact, and dynamically match with emerging economies’ context. This study provides new insights on how manufacturers in emerging economies conduct business model innovation for realizing their servitization transformation.

Manufacturer’s Sharing Servitization Transformation and Product Pricing Strategy

The sharing market includes the idle product sharing by the owner and the firm’s new product sharing. Companies participating in the sharing economy choose to withdraw from the market because it is always difficult to make a profit, due to heavy asset investment, but there is no such worry for owners who do not need cost input. At the same time, we have observed that the sharing products launched by companies are difficult to meet the rental needs of consumers. Based on the above findings, we have constructed a model where there is a market where a monopolistic manufacturer sells and rents out at the same time, and owners who purchased new products can choose to rent out products when they are idle. Because of the uncoordinated supply and demand matching of the sharing market and the excessively high unit cost input, our research found that: (1) the barriers for the manufacturer to enter the sharing market are always high—for example, the manufacturer will choose to enter the sharing market only when consumers have a high rate of availability of sharing products. Only when the cost of products in the sharing market is not low will the manufacturer choose to provide sharing services; (2) the competition between the two products in the sharing market weakens the demand cannibalize in the sales market; (3) the manufacturer enters the sharing market to promote the owner’s income. The owner’s earnings will increase with the rising of sharing products’ availability.

The impact of service-oriented organizational design factors on firm performance: The moderating role of service-oriented corporate culture

While manufacturing firms increasingly adopt servitization, with which they shift the basis of their competitive edge from the product-based mode to the service-based mode, they have to find approaches to implement servitization successfully. An initial attempt to achieve this is to make proper internal organizational changes towards service orientation. However, how do these changes affect firm performance has not been inquired adequately. In addition, limited studies have integrated cultural factors into the relationship between internal changes and firm performance. Focusing on two organizational design (OD) factors, i.e., service-oriented organizational structure (SOOS) and service-oriented human resource management (SOHR), and the cultural factor of service-oriented corporate culture (SOCC), we draw on resource-based theory (RBT) and structural contingency theory (SCT) to conceptualize SOOS, SOHR, and SOCC as tangible organizational, tangible intellectual, and intangible organizational resources, respectively, with a view to ascertaining the direct impacts of SOOS and SOHR on firm performance, as well as the moderating role of SOCC. Based on analysis of data collected from 207 Chinese manufacturing firms, we find that SOOS and SOHR impact firm performance differently, while SOCC differentially moderates the effects of the two OD factors on firm performance. Our findings provide an alternative theoretical lens by combining RBT and SCT to account for the success of firms’ servitization transformation.

Framing the servitization transformation process: A model to understand and facilitate the servitization journey

The concept of servitization is well established in the literature, and yet the processes of organisational change that manufacturers undergo to compete through services have received much less attention. Therefore, this paper develops a model that enables a description of the servitization processes, the principal stages of organisational change, and the forces impacting these processes. It is based on a series of 14 case studies of the process of servitization over time in multinational manufacturers. Evidence and analysis from these cases are used to establish that manufacturers undergo four stages of organisational maturity (Exploration, Engagement, Expansion and Exploitation), through which an organisation progresses according to the pressures of five principal forces (customer pull, technology push, value network positioning, organisational readiness, and organisational commitment). This progression can be characterised as a business growth model with multiple crises or tipping points. This research contributes to our understanding of the process of servitization and proposes a model which can be used to explain progression. It also forms the basis to better prepare manufacturers as to what to expect as they embark on a servitization journey.

Causal or effectual? Dynamics of decision making logics in servitization

This study explores servitization as an innovative market strategy for manufacturers and investigates how the decision making logics change over time in the servitization transformation process. Effectuation theory is applied to examine servitization as a new theoretical exploration. A longitudinal case study of a global heavy vehicle manufacturer's servitization process in China reveals that the decision makers adjust their decision making logics depending on the stage of the servitization process and associated risk patterns. As the servitization process evolves into a more sophisticated stage, decision makers will change their decision making logics from a causation dominant logic to an effectuation dominant logic in order to cope with the increased risks. Effectuation theory originally developed from entrepreneurship research is found to be a valid theory for the explanation of the risk and uncertainty control behaviors in the servitization transformation process of manufacturing firms.

Servitization: revisiting the state-of-the-art and research priorities

PurposeThe purpose of this paper is to consolidate the servitization knowledge base from an organizational change perspective, identifying developed, developing and undeveloped topics to provide a platform that directs future research.Design/methodology/approachThis paper addresses three objectives: it comprehensively examines organizational change management literature for selection of a theoretical framework; it classifies extant studies within the framework through a systemic literature review; and it analyses 232 selected papers and proposes a research agenda.FindingsAnalysis suggests increasing global awareness of the importance of services to manufacturers. However, some topics, especially related to servitization transformation, remain undeveloped.Research limitations/implicationsAlthough the authors tried to include all publications relevant to servitization, some might not have been captured. Evaluation and interpretation relied on the research team and subsequent research workshops.Practical implicationsOne of the most significant challenges for practitioners of servitization is how to transform a manufacturing organization to exploit the opportunity. This paper consolidates literature regarding servitization, identifying progress concerning key research topics and contributing a platform for future research. The goal is to inform research to result eventually in a roadmap for practitioners seeking to servitize.Originality/valueAlthough extant reviews of servitization identify themes that are examined well, they struggle to identify unanswered questions. This paper addresses this gap by focusing on servitization as a process of organizational change.

Transformation of a small-to-medium-sized enterprise to a multi-organisation product-service solution provider

This paper aims to: (1) précis the extant literature on servitization and enterprization transformations, focusing on the role of information technology (IT) and information systems (IS) and their inter-relationships; (2) illustrate these interrelationships by showing how a small-to-medium-sized enterprise (SME) can move from being a predominantly independent SME, delivering only products, to become part of a multi-organisation enterprise able to deliver product-service solutions; and (3) provide generic learning by proposing a new integrated business transformation model. The methodology used is abductive action research. A literature review is conducted to provide academically grounded themes to inform and interpret practical actions. An empirical case study is conducted with a UK SME from the construction industry that provides empirical data to illustrate a business transformation. Inductive reasoning is used to propose a new integrated transformation model. Findings show that enterprization and servitization transformation themes are highly interdependent and co-implementable when an IT/IS focus is taken. Furthermore, these transformations can be used as part of a successful strategy for growth by an SME. A new operating structure, labelled a product-service enterprise (PSE), is proposed as part of a business transformation model to assist future deliveries of product-service solutions (PSSns). Actions and findings are based on a single empirical case abducted with academic themes. Whilst it is probable that the themes and actions have contributed towards the organization's successful growth, no absolute deterministic causality is claimed.

Exploring the Key Enabling Role of Digital Technologies for PSS Offerings

The adoption of digital technologies has been identified as crucial for manufacturers moving to service-based business [18,27,28]. However, it is not clear how technological improvement are central to develop key capabilities for business and service innovation [1]. This paper aims at filling this gap, focusing on the following aspects: 1) the key capabilities enabled by digital technologies to support servitization transformation; 2) the relationship between each specific value proposition and those capabilities. To ground our findings on extant research, we adopt the classification provided by [19], and we refer to three strategies, namely equipment suppliers, availability providers and performance providers.

Value and Servitization: Creating Complex Deployed Responsive Services

A value framework can be used to describe the servitization transformation from traditional manufacturing business model to the current endpoint of a complex deployed responsive service delivered within the customer's dynamic environment, where the ability to capture worth is determined by the success of the customer.