When digital servitization pays off for manufacturing SMEs: A configurational approach

Servitization and digital servitization offer manufacturers fresh revenue opportunities, yet financial payoffs remain uneven, particularly for small and medium-sized enterprises (SMEs). Grounded in contingency theory, this study asks under what conditions different digital servitization business models lead to SME financial benefits, compared to more ‘traditional’ ones where digital technologies play a diminished role. We survey 361 UK manufacturing SMEs, and, using fuzzy-set qualitative comparative analysis (fsQCA), we uncover 15 configurations of organizational factors (product and process complexity, digital maturity, service-oriented employee culture) and environmental contingencies (competitive intensity, technological turbulence, demand unpredictability) that are sufficient for superior financial performance across six business model archetypes. The findings reject a single “best” route to profitability, but demonstrate the comparative advantage of digital servitization. In line with extant literature, this study supports the idea that financial success of SMEs arises from the alignment among business model, environmental conditions, and organizational factors. Moreover, it offers actionable guidance to SME managers by emphasizing organizational levers, and suggests that policymakers should go beyond technology-focused funding, towards fostering the development of service-oriented skills and providing demand diagnostic support, thereby de-risking the digital servitization journey for SMEs.