Explaining the servitization paradox: a configurational theory and a performance measurement framework

Abstract

PurposePrevious research reports mixed results regarding the performance impact of servitization in manufacturing firms. To resolve this, the purpose of this paper is to develop a conceptually consistent and comprehensive measurement framework for both dimensions, servitization and its performance effect, and apply in a configurational analysis to reexamine previous evidence, arriving at a configurational theory of the relationship between servitization and firm performance.Design/methodology/approachCombining systematic literature review (SLR) and inductive reasoning, the existing indicators for servitization and performance are identified and clustered into groups that adequately represent both dimensions. The dataset is reanalyzed against the resulting framework to identify the configurational patterns and to formulate the theoretical propositions.FindingsFinancial and nonfinancial indicators of servitization and its performance impact are organized into a comprehensive measurement framework grounded on existing research. The subsequent meta-analysis shows that the positive or negative impacts of servitization on performance depend on how firms implement servitization strategies and which performance aspects are examined.Research limitations/implicationsThe results explain when servitization can be successful and confirm the existence of the so-called servitization paradox. The meta-analysis identified patterns that explain the previous mixed results, shaping a configurational theory of servitization. Thus, the measurement framework is conceptually robust and has sufficient detail to capture servitization and its performance outcome as it feasibly distinguished between different organizational configurations.Originality/valueThe framework provides a comprehensive portfolio of indicators for both managers and scholars to measure servitization intensity and performance. This supports managers of servitizing firms in leading this organizational transformation while avoiding its organizational and financial paradoxes.

Servitisation and performance in the business-to-business context: the moderating role of Industry 4.0 technologies

“…In this sense, managing the transition from products to services may imply difficulties that may result in the so-called "service JMTM 33,9 paradox" (Baines et al, 2017;Brax, 2005). According to Brax et al (2021), the servitisationperformance relationship is threatened by two main paradoxes: the financial paradox, which occurs when a firm, despite substantial investments and additional costs to extend the service business, does not achieve the expected returns (Neely, 2008), and the organisational paradox, which occurs when the firm incurs a risk of failure during the process due to organisational rigidities (Brax, 2005;Brax et al, 2021).…”

Performance evaluation of after-sales service partners in the power tools industry

“…The first that is widely used is the correlation between service levels and several financial performance indicators such as income and profits; second, which is used less frequently, is the achievement of a holistic set of goals, both financial and non-financial performance indicators. Service performance is also referred to as service success [6]. The key to a successful ASS system is to evaluate a comprehensive system of performance, service flexibility, company and personnel reliability, customer expectations about service, the impact of technological developments on customer satisfaction [20].…”

“…Lightfoot & Gebauer [3] Is the warranty process running according to the provisions from the center (Q3) Borchardt et al [6] Are used parts stored according to the provisions of the center (Q4)…”

“…Pistoni & Songini [25] Performance & User Satisfaction (PU) Do you have a software system that monitors the status and duration of repairs (Service Technology) (PU1) Brax et al [6] How many tools are completed in 24 hours (PU2) Murali et al [24]; Lightfoot & Gebauer [3] What is the total number of warranty tools repaired (PU3) Murali et al [24]; Lightfoot & Gebauer [3] Do regularly collect input from users (PU4) Brax et al [6] The ASS performance of the power tool industry is measured using six variables, namely competitive advantages (CA), availability (AV), affordability (AF), accessibility (AC), quality (Q), and performance & user satisfaction (PU). Each variable consists of several indicators; the CA variable consists of three indicators, AV has three indicators, AF has three indicators, AC has five indicators, Q has four indicators, and PU has four indicators.…”

“…ASS and warranty have extensive literature, providing more details on the mainstream such as warranty marketing aspects, warranty is treated as a competitive factor [5]. Servitization refers to a service-based strategy and its growing business implementation in manufacturing and other traditional product-based industries [6]. Most of the turnover for many manufacturers by the sale of new Available online at: http://e-jurnal.lppmunsera.org/index.php/JSMI Jurnal Sistem dan Manajemen Industri ISSN (Print) 2580-2887 ISSN (Online) 2580-2895 http://dx.doi.org/10.30656/jsmi.v5i2.3985 goods with their after-sales service becomes a mandatory addition to provide with new sales [7].…”