The impact of servitization on the environmental and social performance in manufacturing firms

Abstract

PurposeThis study aims to examine how servitization affects the environmental and social performance of manufacturing firms.Design/methodology/approachThe hypotheses are tested using fixed-effect panel models based on secondary data of 1,413 manufacturing firms publicly listed in the USA.FindingsResults show that servitization is positively related to the social performance of manufacturing firms; this positive relationship is more prominent under high levels of human resource slack. However, the impact of servitization on environmental performance depends on the level of absorptive capacity and human resource slack. Servitization improves environmental performance under high levels of absorptive capacity and human resource slack, while this positive impact is insignificant under low levels of absorptive capacity and human resource slack.Research limitations/implicationsThe study focuses on the degree (depth) of servitization but ignores the scope of services provided by manufacturing firms (breadth of servitization).Practical implicationsThis research suggests that servitization is an effective way of achieving simultaneous improvements in environmental and social performance. However, high levels of absorptive capacity and human resource slack are needed to achieve this goal.Originality/valueThis study contributes to the servitization literature by demonstrating the environmental and social sustainability benefits of servitization. The findings also highlight the crucial role of absorptive capacity and human resource slack on improving environmental and social performance through servitization.

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

“…However, to reduce the failure risk we recommend verifying in advance that the firm has the resources and capabilities needed to successfully redefine internal and external processes and, if necessary, the relations within the value chain. Since both servitisation and Industry 4.0 are resource- and skill-demanding processes (Zhang et al. , 2022; Brax, 2005; Mourtzis et al.…”

“…more insights into customers' needs, increased customer loyalty and higher levels of client retention), social and environmental benefits (e.g. reduced waste during production due to streamlined activities along the supply chain) (Wang et al, 2018;Baines et al, 2017;Zhang et al, 2022). Conversely, servitisation can also lead to negative outcomes, such as financial losses (Visnjic et al, 2016), additional costs and potential drawbacks (Valtakoski, 2017) and strategic failures (Brax et al, 2021).…”

“…However, to reduce the failure risk we recommend verifying in advance that the firm has the resources and capabilities needed to successfully redefine internal and external processes and, if necessary, the relations within the value chain. Since both servitisation and Industry 4.0 are resource-and skill-demanding processes (Zhang et al, 2022;Brax, 2005;Mourtzis et al, 2014;M€ uller et al, 2021;Marcon et al, 2022), a priori evaluations and planning are necessary to overcome the unprofitable period that reflects the "service paradox" and achieve the combination of excellence-driven servitisation and technology endowment that will benefit the SME (Brax et al, 2021;Kowalkowski et al, 2017b).…”

9th International Conference on Business Servitization

“…Within the literature, studies continue to suggest that servitization has positive sustainable outcomes. For example, studies show that servitization drives manufacturers to change products' designs to extend their lifetime, reduce energy consumption and provide information to customers' as to how to minimise their environmental impact (Grubic, 2014;Doni et al, 2019;Parida et al, 2014;Tukker, 2015); how it can lead to improved resource/asset efficiency through improved maintenance (Grubic, 2014;Zhang et al, 2021); and how product-as-a-service/outcome-based services bring about retained product ownership which enables the manufacturer to better monitor product condition and that this facilitates reuse and recycling operations, and ultimately a reduction of waste through the lifetime of the assets operation (Zhang et al, 2021). Each of these is argued to increase as providers move from selling products to selling advanced services, where the focus of the customer increases .…”

Environmental performance of servitized manufacturing firms: the (mis)alignment between servitization strategies and inter-organizational information technology capabilities

“…As a result, manufacturers are paying close attention to environmentally friendly strategies that are beneficial to environmental performance (Zhang et al. , 2022).…”