Servitization and digitalization in manufacturing: the influence on firm performance

Abstract

This paper aims to present a comprehensive framework that integrates the emerging trends of servitization and digitalization in manufacturing.The influence between digitalization and servitization is defined and quantified. Their contribution to firm performance is analyzed. This paper presents a theoreticalmodel that captures the relationships between the analyzed variables. Drawing on the Spanish Business Strategy Survey, hypothesis testing is conducted using data on 828 Spanish industrial firms. Linear regression models are built to capture the effect of each variable on firm performance and the type of interaction between the variables. Servitization and digitalization are positively related to firm performance. Digitalization positively mediates the relationship between servitization and firm performance. The mediating effect of digitalization contributes to differentiating between the direct and indirect effects of servitization on firm performance. The paper provides a useful analysis framework for firms to evaluate servitization and digitalization as successs trategies. It is proposed that firms must simultaneously commit to digital transformation and the incorporation of services to createvalue, especially in business-to-businesssettings.Servitization and digitalization interact to exert a greater influence on performance. The paper contributes to the theory on service strategy by providing an analysis model that includes digitalization as a mediator of the relationship between servitization and firm performance. Digitalization may provide a mechanism to unlock the benefits of servitization and there by enhance firm performance.