Strategic orientation of servitization in manufacturing firms and its impacts on firm performance

Abstract

Purpose

The purpose of this paper is to provide implementation insights and implications regarding the strategic orientations of servitization by testing its impacts on firm performance, including financial performance and customer service performance.

Design/methodology/approach

Empirical research is conducted using an online survey disseminated to manufacturing firms in Southeast China. This research develops and verifies a strategic fit framework to understand the relationship between the strategic orientation of servitization and service innovation (SI), and its resulting impacts on firm performance.

Findings

The results show that service orientation (SO) has direct positive impacts on firm performance in the manufacturing sector. Customer orientation (CO) and learning orientation (LO) have no direct impact on firm performance, although they have indirect impacts on it via the mediating role of SI capability. Moreover, SO has a similar indirect impact on firm performance via SI capability.

Research limitations/implications

The survey focuses only on China; future studies should verify whether different cultural backgrounds impact the research results.

Practical implications

The results suggest that firms should build up three strategic orientations (SO, CO and LO) for implementing servitization to facilitate SI capability and, thus, to improve firm performance.

Originality/value

This research contributes to enhancing the theory of servitization by developing a strategic fit model of servitization and revealing the impact mechanism of servitization in the manufacturing sector.

Citation

Lin, Y., Luo, J., Ieromonachou, P., Rong, K. and Huang, L. (2019), "Strategic orientation of servitization in manufacturing firms and its impacts on firm performance", Industrial Management & Data Systems, Vol. 119 No. 2, pp. 292-316. https://doi.org/10.1108/IMDS-10-2017-0485