Servitization and performance: impacts on small and medium enterprises

Abstract

Purpose This study aims to examine the impact of the servitization on the performance of small and medium enterprises (SMEs) in Brazil. Design/methodology/approach The study uses data from Brazilian SMEs and applies partial least squares structural equation modeling (PLS-SEM) to test the research hypotheses. Findings The findings suggest a positive relationship between servitization and SME performance. It is found that the strategy of offering base services does impact SME performance. Furthermore, servitization aims to promote a fit between environmental pressures and SME performance. Practical implications SMEs can use servitization to increase their performance in spite of their resources restrictions, size limitation and low level of service revenue. However, the adoption of servitization should be accompanied by managerial adjustments in servitization practices. Originality/value This paper is dedicated to investigating the servitization-performance relationship in the context of SMEs, which is not a usual research publication. Moreover, it adds to the servitization theory by demonstrating that it is not necessary to reach a critical mass of services to be profitable and base services may be also a source of revenues and profits.

Business Model Innovation in Transforming Economies: A Co-evolutionary Perspective for a Global and Digital World

“…First, it can change the competitive dynamics in the domestic environment. This happens because business model innovation can lead to improved business performance (e.g., Queiroz et al, 2020; Smajlovi et al, 2019; Wu et al, 2010) and to new ways of interacting with customers, suppliers, and local institutions.…”

Facilitating Servitization in Manufacturing Firms: The Influence of Strategic Orientation

“…Following this line of reasoning, we attempt to examine whether the firm size, a distinctive feature of the firm, plays a contingent role on the performance effects of BAS and ADS. Size has been considered an important condition that might moderate the impact of servitization and shape the choice related to servitization in previous research [21,32].…”

“…Moreover, with a few exceptions, servitization is generally studied as homogeneous in previous research. Services offered by manufacturing firms take on various forms, ranging from an addition to a basic product or sales process to a constituent of an integrated solution [31,32]. As these services differ substantially in regard to their requirements, level of risk, and potential of creating competitive advantages [7,12,33], treating them as an undifferentiated mixture would make it difficult to profit from servitization.…”

A conceptual framework for integrating the critical success factors to service innovation

“…The first deals with service innovation for manufacturing companies since many of these businesses have invested in integrated product supply and services for their customers (Kowalkowski et al, 2017;Mina et al, 2014;Baines, 2015;Queiroz et al, 2020). Services, thus, play an important role in these companies and are not merely simply added features to the products (Baines, 2015).…”

“…the health care sector, the hotel industry, and the financial and technological sectors have all sought out service innovation methods as a way of increasing value for their customers and to increase their competitiveness (Chen & Tsou, 2006;Vasconcellos & Marx, 2011;Storey et al, 2016;Tomaszewski et al, 2016). Manufacturing companies have adjusted their production centric business models to represent service-oriented models, and this trend has been called "Servitization" (Lütjen et al, 2019;Martinez et al, 2019;Sjödin et al, 2020;Queiroz et al, 2020;Vandermerwe & Rada, 1988). Service innovation can be a great source of benefits for product and financial competitiveness for manufacturing companies (Baines et al, 2017;Mendes et al, 2017;Sjödin et al, 2020).…”