The innovation antecedents behind the servitization–performance relationship

Abstract

Servitization allows manufacturing firms to differentiate themselves from rivals and become more competitive. Scholars have studied the service paradox, but analysis of the relationship between servitization and firm performance has provided inconclusive results. In terms of the antecedents that influence this relationship, the literature has tended to focus on firm and product characteristics but not on companies' innovative behavior. This article probes the relationship between servitization and firm performance by focusing on two forms of innovation (technological and open) that may exert an influence. The study draws on the resource-based view literature to explain the role of interactions between technological innovation, service innovation, and open innovation in enhancing firm performance. Longitudinal empirical analysis was conducted with a sample of Spanish industrial firms for the period 2010–2016. Two time-lagged models were built and analyzed. The results show that technological innovation influences servitization. This relationship is moderated by open innovation. Servitization mediates the relationship between technological innovation and firm performance. The findings contribute to the literature on servitization and innovation management. Innovation is posited as an antecedent to the service paradox. Products, services, and open innovation should be considered when firms design innovation strategies to improve their performance. Such innovation strategies should lead to an increase in servitization. Service innovation should be supported by open innovation to strengthen technological innovation potential.