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The logic for increasing service revenue in product manufacturing companies

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  • Heiko Gebauer

Abstract

To respond to increasing challenges from competitors, manufacturing companies have developed a growing interest in extending their service business. They have started initiatives to generate revenue growth through services. However, creating service revenue is not easy. The majority of manufacturing companies still earn a relatively small share of their total revenue through services. If services were fundamentally ineffective in generating revenue, it would be easy to explain why companies struggle to succeed in deriving a high percentage of overall revenue from services. It would not explain, however, why some companies have, in the past, achieved a high share of service revenue. Based on five focus groups and ten in-depth bi-polar case studies, we attempt to provide a better understanding of how manufacturing companies can increase their service revenue. We illustrate the implicit logic of increasing service revenue, the keys to success and fundamental dimensions for implementing them.

Suggested Citation

  • Heiko Gebauer, 2007. "The logic for increasing service revenue in product manufacturing companies," International Journal of Services and Operations Management, Inderscience Enterprises Ltd, vol. 3(4), pages 394-410.
    • Handle: RePEc:ids:ijsoma:v:3:y:2007:i:4:p:394-410
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    Cited by:

    1. Dachs, Bernhard & Biege, Sabine & Borowiecki, Marcin & Lay, Gunther & Jäger, Angela & Schartinger, Doris, 2012. "The Servitization of European Manufacturing Industries," MPRA Paper 38873, University Library of Munich, Germany.
    2. He, Yuanqiong & Keung Lai, Kin & Sun, Hongyi & Chen, Yun, 2014. "The impact of supplier integration on customer integration and new product performance: The mediating role of manufacturing flexibility under trust theory," International Journal of Production Economics, Elsevier, vol. 147(PB), pages 260-270.
    3. Martin Falk & Fei Peng, 2013. "The increasing service intensity of European manufacturing," The Service Industries Journal, Taylor & Francis Journals, vol. 33(15-16), pages 1686-1706, December.
    4. Yuanqiong He & Hongyi Sun & Kin Lai & Yun Chen, 2015. "Organizational empowerment and service strategy in manufacturing," Service Business, Springer;Pan-Pacific Business Association, vol. 9(3), pages 445-462, September.

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