Servitization and organizational performance in the machinery and equipment sector
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Abstract
The role of manufacturing in value chains has become less dominant given the trend of stagnating demand, commoditization of products, and declining profitability. Confronted with this challenging scenario, a growing number of companies seek to add value to their businesses by adopting the approach of “servitization” (offering product-service solutions). However, literature on this subject is divided on the effectiveness of this approach since the intended outcome is not always achieved (service paradox). As such, this study quantitatively evaluates this relationship in manufacturing firms within the machinery and equipment industry. Data on different service categories developed by these firms and their corresponding impacts were collected. It was verified that there is a positive and significant relationship between the majority of these service categories and organizational performance, which indicates that identifying and developing a consistent service bundle may serve as an effective servitization strategy.
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