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Financial performance response of manufacturers to servitization: curvilinear relationship mediated by service business focus and moderated by digital technology application

Beini Liu (Business School, Beijing Technology and Business University, Beijing, China)
Zhenyan Li (Business School, Beijing Technology and Business University, Beijing, China)
Yaoyao Fu (Business School, Beijing Technology and Business University, Beijing, China)

Journal of Service Theory and Practice

ISSN: 2055-6225

Article publication date: 26 February 2024

217

Abstract

Purpose

Servitization of products is becoming increasingly prevalent among manufacturing enterprises. Existing research has primarily focused on exploring whether the direct impact of servitization on manufacturer performance follows a linear or a curvilinear relationship. However, the understanding of the underlying mechanisms between servitization and manufacturer financial performance remains limited. This paper aims to examine the non-linear relationship between servitization and manufacturer performance as well as the mediating process and boundary condition associated with this relationship.

Design/methodology/approach

Drawing on resource-advantage theory, this paper proposes a theoretical model of the U-shaped relationship between servitization and the financial performance of equipment manufacturers. Panel data of 248 listed equipment manufacturers in China during the period of 2010–2020 are used to test each hypothesis through the ordinary least square method.

Findings

The empirical results indicate that servitization follows a U-shaped relationship with service business focus and the financial performance of equipment manufacturers. Service business focus mediates this U-shaped relationship between servitization and financial performance, and digital technology application moderates this relationship.

Originality/value

This paper pioneers the unraveling of the potential mechanism that can explain the curvilinear relationship between servitization of manufacturers and financial performance. This mechanism is the focus of the service business, which is theoretically delineated and empirically tested. Furthermore, digital technology application enables manufacturers to achieve service business focus more effectively in the process of servitization. Thus, this study addresses the call for research on digital servitization.

Keywords

Acknowledgements

This research was funded by the National Natural Science Foundation of China (No. 72202007), the Humanities and Social Sciences Foundation of the Ministry of Education of China (No. 22YJC630082) and Innovation Centre for Digital Business and Capital Development of Beijing Technology and Business University (No. SZSK202214).

Citation

Liu, B., Li, Z. and Fu, Y. (2024), "Financial performance response of manufacturers to servitization: curvilinear relationship mediated by service business focus and moderated by digital technology application", Journal of Service Theory and Practice, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/JSTP-07-2023-0200

Publisher

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Emerald Publishing Limited

Copyright © 2024, Emerald Publishing Limited

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