IDEAS home Printed from https://ideas.repec.org/a/eee/proeco/v219y2020icp31-42.html
   My bibliography  Save this article

Performance implications of servitization: Does a Manufacturer's service supply network matter?

Author

Listed:
  • Zhou, Dan
  • Yan, Tingting
  • Zhao, Lilong
  • Guo, Jingjing

Abstract

To clarify the puzzling performance implications of servitization for manufacturers, this study examines how a manufacturer's service supply network moderates the non-linear performance effect of servitization. We test the hypotheses using survey responses collected from 143 servitized manufacturers in China. Our three-step statistical test confirms that servitization has a U-shaped relationship with a manufacturer's financial performance. We also find partial support for the moderating effects of the service supply network, which are characterized by tie strength and structural holes. Specifically, we show that stronger ties between a manufacturer and major service suppliers intensify the U-shaped servitization-performance relationship. However, we do not find support for a moderating effect of service network structural holes, despite their direct negative effect on manufacturer financial performance. By bridging the servitization and supply network literature, this study reveals novel findings that can help manufacturers understand how to leverage their service supplier networks to increase the financial return from their servitization endeavors.

Suggested Citation

  • Zhou, Dan & Yan, Tingting & Zhao, Lilong & Guo, Jingjing, 2020. "Performance implications of servitization: Does a Manufacturer's service supply network matter?," International Journal of Production Economics, Elsevier, vol. 219(C), pages 31-42.
    • Handle: RePEc:eee:proeco:v:219:y:2020:i:c:p:31-42
    DOI: 10.1016/j.ijpe.2019.05.019
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0925527319302002
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.ijpe.2019.05.019?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Tim Rowley & Dean Behrens & David Krackhardt, 2000. "Redundant governance structures: an analysis of structural and relational embeddedness in the steel and semiconductor industries," Strategic Management Journal, Wiley Blackwell, vol. 21(3), pages 369-386, March.
    2. Vandermerwe, Sandra & Rada, Juan, 1988. "Servitization of business: Adding value by adding services," European Management Journal, Elsevier, vol. 6(4), pages 314-324, December.
    3. Lily H. Fang & Josh Lerner & Chaopeng Wu, 2017. "Intellectual Property Rights Protection, Ownership, and Innovation: Evidence from China," The Review of Financial Studies, Society for Financial Studies, vol. 30(7), pages 2446-2477.
    4. Xing, Yijun & Liu, Yipeng & Tarba, Shlomo & Cooper, Sir Cary L., 2017. "Servitization in mergers and acquisitions: Manufacturing firms venturing from emerging markets into advanced economies," International Journal of Production Economics, Elsevier, vol. 192(C), pages 9-18.
    5. Erik Lindhult & Koteshwar Chirumalla & Pejvak Oghazi & Vinit Parida, 2018. "Value logics for service innovation: practice-driven implications for service-dominant logic," Service Business, Springer;Pan-Pacific Business Association, vol. 12(3), pages 457-481, September.
    6. Peter Moran, 2005. "Structural vs. relational embeddedness: social capital and managerial performance," Strategic Management Journal, Wiley Blackwell, vol. 26(12), pages 1129-1151, December.
    7. Jo Thori Lind & Halvor Mehlum, 2010. "With or Without U? The Appropriate Test for a U‐Shaped Relationship," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 72(1), pages 109-118, February.
    8. Valérie Mathieu, 2001. "Product services: from a service supporting the product to a service supporting the client," Post-Print hal-01796270, HAL.
    9. Bill McEvily & Akbar Zaheer, 1999. "Bridging ties: a source of firm heterogeneity in competitive capabilities," Strategic Management Journal, Wiley Blackwell, vol. 20(12), pages 1133-1156, December.
    10. Saccani, Nicola & Visintin, Filippo & Rapaccini, Mario, 2014. "Investigating the linkages between service types and supplier relationships in servitized environments," International Journal of Production Economics, Elsevier, vol. 149(C), pages 226-238.
    11. Richard F. J. Haans & Constant Pieters & Zi-Lin He, 2016. "Thinking about U: Theorizing and testing U- and inverted U-shaped relationships in strategy research," Strategic Management Journal, Wiley Blackwell, vol. 37(7), pages 1177-1195, July.
    12. Haibin Yang & Zhiang (John) Lin & Ya (Lisa) Lin, 2010. "A multilevel framework of firm boundaries: firm characteristics, dyadic differences, and network attributes," Strategic Management Journal, Wiley Blackwell, vol. 31(3), pages 237-261, March.
    13. Valérie Mathieu, 2001. "Service strategies within the manufacturing sector: benefits, costs and partnership," Post-Print hal-01796269, HAL.
    14. Ayala, Néstor Fabián & Paslauski, Carolline Amaral & Ghezzi, Antonio & Frank, Alejandro Germán, 2017. "Knowledge sharing dynamics in service suppliers' involvement for servitization of manufacturing companies," International Journal of Production Economics, Elsevier, vol. 193(C), pages 538-553.
    15. Fernando F. Suarez & Michael A. Cusumano & Steven J. Kahl, 2013. "Services and the Business Models of Product Firms: An Empirical Analysis of the Software Industry," Management Science, INFORMS, vol. 59(2), pages 420-435, November.
    16. Feng, Bo & Fan, Zhi-Ping & Li, Yanzhi, 2011. "A decision method for supplier selection in multi-service outsourcing," International Journal of Production Economics, Elsevier, vol. 132(2), pages 240-250, August.
    17. Gautam Ahuja & Riitta Katila, 2004. "Where do resources come from? The role of idiosyncratic situations," Strategic Management Journal, Wiley Blackwell, vol. 25(8‐9), pages 887-907, August.
    18. Wolfgang Ulaga & Andreas Eggert & Jens Hogreve & Eva Muenkhoff, 2011. "Industrial services, product innovations, and firm profitability: A multiple-group latent growth curve analysis," Post-Print hal-00632809, HAL.
    19. Sanna Nenonen & Olli Ahvenniemi & Miia Martinsuo, 2014. "Image risks of servitization in collaborative service deliveries," The Service Industries Journal, Taylor & Francis Journals, vol. 34(16), pages 1307-1329, December.
    20. Peter J. Lane & Michael Lubatkin, 1998. "Relative absorptive capacity and interorganizational learning," Post-Print hal-02311860, HAL.
    21. Ali Ziaee Bigdeli & Oscar F. Bustinza & Ferran Vendrell-Herrero & Tim Baines, 2018. "Network positioning and risk perception in servitization: evidence from the UK road transport industry," International Journal of Production Research, Taylor & Francis Journals, vol. 56(6), pages 2169-2183, March.
    22. Raassens, Néomie & Wuyts, Stefan & Geyskens, Inge, 2014. "The performance implications of outsourcing customer support to service providers in emerging versus established economies," International Journal of Research in Marketing, Elsevier, vol. 31(3), pages 280-292.
    23. He, Yuanqiong & Lai, Kin Keung, 2012. "Supply chain integration and service oriented transformation: Evidence from Chinese equipment manufacturers," International Journal of Production Economics, Elsevier, vol. 135(2), pages 791-799.
    24. Zhou, Yong-Wu & Guo, Jinsen & Zhou, Wenhui, 2018. "Pricing/service strategies for a dual-channel supply chain with free riding and service-cost sharing," International Journal of Production Economics, Elsevier, vol. 196(C), pages 198-210.
    25. Chen, Kaui-Hwang & Wang, Chun-Hsien & Huang, Shi-Zheng & Shen, George C., 2016. "Service innovation and new product performance: The influence of market-linking capabilities and market turbulence," International Journal of Production Economics, Elsevier, vol. 172(C), pages 54-64.
    26. Justin Tan & Hongjuan Zhang & Liang Wang, 2015. "Network Closure or Structural Hole? The Conditioning Effects of Network–Level Social Capital on Innovation Performance," Entrepreneurship Theory and Practice, , vol. 39(5), pages 1189-1212, September.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Sehrish Atif, 2023. "Mapping circular economy principles and servitisation approach in business model canvas: an integrated literature review," Future Business Journal, Springer, vol. 9(1), pages 1-21, December.
    2. Vivares, Jorge A. & Avella, Lucía & Sarache, William, 2022. "Trends and challenges in operations strategy research: Findings from a systematic literature review," Cuadernos de Gestión, Universidad del País Vasco - Instituto de Economía Aplicada a la Empresa (IEAE).
    3. Chaudhuri, Ranjan & Chatterjee, Sheshadri & Gupta, Shivam & Kamble, Sachin, 2023. "Green supply chain technology and organization performance: Moderating role of environmental dynamism and product-service innovation capability," Technovation, Elsevier, vol. 128(C).
    4. Yan, Kaining & Li, Gang & Cheng, T.C.E., 2020. "The impact of service-oriented organizational design factors on firm performance: The moderating role of service-oriented corporate culture," International Journal of Production Economics, Elsevier, vol. 228(C).
    5. Zhou, Dan & Yan, Tingting & Dai, Weiqi & Feng, Junzheng, 2021. "Disentangling the interactions within and between servitization and digitalization strategies: A service-dominant logic," International Journal of Production Economics, Elsevier, vol. 238(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Wang, Yanping & Gao, Jie & Wei, Zelong, 2022. "The double-edged sword of servitization in radical product innovation: The role of latent needs identification," Technovation, Elsevier, vol. 118(C).
    2. Matthieu Crozet & Emmanuel Milet, 2017. "Should everybody be in services? The effect of servitization on manufacturing firm performance," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 26(4), pages 820-841, December.
    3. Gilsing, Victor & Nooteboom, Bart & Vanhaverbeke, Wim & Duysters, Geert & van den Oord, Ad, 2008. "Network embeddedness and the exploration of novel technologies: Technological distance, betweenness centrality and density," Research Policy, Elsevier, vol. 37(10), pages 1717-1731, December.
    4. Jieun Lee & Hyung-Deok Shin & Saehwa Hong, 2021. "Servitization of Global Manufacturing Business," Journal of Industry, Competition and Trade, Springer, vol. 21(4), pages 565-584, December.
    5. Andrea Tenucci & Enrico Supino, 2020. "Exploring the relationship between product-service system and profitability," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 24(3), pages 563-585, September.
    6. Duysters, Geert & Vanhaverbeke, Wim & Beerkens, Bonnie & Gilsing, Victor, 2007. "Exploration and Exploitation in Technology-based Alliance Networks," MERIT Working Papers 2007-020, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    7. Shah, Syed Aamir Ali & Jajja, Muhammad Shakeel Sadiq & Chatha, Kamran Ali & Farooq, Sami, 2020. "Servitization and supply chain integration: An empirical analysis," International Journal of Production Economics, Elsevier, vol. 229(C).
    8. Lütjen, Heiner & Tietze, Frank & Schultz, Carsten, 2017. "Service transitions of product-centric firms: An explorative study of service transition stages and barriers in Germany's energy market," International Journal of Production Economics, Elsevier, vol. 192(C), pages 106-119.
    9. Freije, Inmaculada & de la Calle, Alberto & Ugarte, José V., 2022. "Role of supply chain integration in the product innovation capability of servitized manufacturing companies," Technovation, Elsevier, vol. 118(C).
    10. Pedro E. Minaya & Lucía Avella & Juan A. Trespalacios, 2023. "The effects of digital servitization on business competitiveness: A case study of Spanish manufacturers," Journal of International Entrepreneurship, Springer, vol. 21(2), pages 180-213, June.
    11. Li, Ai Qiang & Kumar, Maneesh & Claes, Björn & Found, Pauline, 2020. "The state-of-the-art of the theory on Product-Service Systems," International Journal of Production Economics, Elsevier, vol. 222(C).
    12. Marko Kohtamäki & Stephan C. Henneberg & Veronica Martinez & Koji Kimita & Heiko Gebauer, 2019. "A Configurational Approach to Servitization: Review and Research Directions," Service Science, INFORMS, vol. 11(3), pages 213-240, October.
    13. Zhou, Dan & Yan, Tingting & Dai, Weiqi & Feng, Junzheng, 2021. "Disentangling the interactions within and between servitization and digitalization strategies: A service-dominant logic," International Journal of Production Economics, Elsevier, vol. 238(C).
    14. Karatzas, Antonios & Daskalakis, George & Bastl, Marko & Johnson, Mark, 2022. "Risky business? Shareholder value effects of service provision," International Journal of Production Economics, Elsevier, vol. 244(C).
    15. Bustinza, Oscar F. & Vendrell-Herrero, Ferran & Gomes, Emanuel, 2020. "Unpacking the effect of strategic ambidexterity on performance: A cross-country comparison of MMNEs developing product-service innovation," International Business Review, Elsevier, vol. 29(6).
    16. Antonios Karatzas & Mark Johnson & Marko Bastl, 2016. "Relationship Determinants of Performance in Service Triads: A Configurational Approach," Journal of Supply Chain Management, Institute for Supply Management, vol. 52(3), pages 28-47, July.
    17. Ayala, Néstor Fabián & Paslauski, Carolline Amaral & Ghezzi, Antonio & Frank, Alejandro Germán, 2017. "Knowledge sharing dynamics in service suppliers' involvement for servitization of manufacturing companies," International Journal of Production Economics, Elsevier, vol. 193(C), pages 538-553.
    18. Wei, Zelong & Huang, Wengao & Wang, Yanping & Sun, Lulu, 2022. "When does servitization promote product innovation? The moderating roles of product modularization and organization formalization," Technovation, Elsevier, vol. 117(C).
    19. Bustinza, Oscar F. & Lafuente, Esteban & Rabetino, Rodrigo & Vaillant, Yancy & Vendrell-Herrero, Ferran, 2019. "Make-or-buy configurational approaches in product-service ecosystems and performance," Journal of Business Research, Elsevier, vol. 104(C), pages 393-401.
    20. Sabrina Weigel & Karsten Hadwich, 2019. "Erfolgsfaktoren von Dienstleistungsnetzwerken im Kontext der Servicetransformation – Eine qualitative Analyse [Success Factors of Service Networks in the Context of Servitization – A Qualitative An," Schmalenbach Journal of Business Research, Springer, vol. 71(1), pages 1-43, March.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:proeco:v:219:y:2020:i:c:p:31-42. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/ijpe .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.