Title

Should everybody be in services? The effect of servitization on manufacturing firm performance

Document Type

Journal article

Source Publication

Journal of Economics & Management Strategy

Publication Date

4-2017

Volume

Advance publication

First Page

1

Last Page

22

Publisher

Wiley-Blackwell Publishing, Inc.

Keywords

Servitization, Deindustrialisation, Firm performance.

Abstract

The servitization of the manufacturing sector refers to the evolution of manufacturers' capabilities to offer services as complements to or substitutes for the goods that they produce. A vast literature has described these strategies and has shown that this phenomenon is widespread and growing in most developed economies. However, very little systematic evidence of the extent or consequences of servitization based on a comprehensive data set of firms exists. In this paper, we provide such evidence using exhaustive data for French manufacturing firms between 1997 and 2007. We find that the vast majority of French manufacturers sell services in addition to producing goods. The shift toward services is growing steadily but at a slow pace. We also estimate the impact of servitization on firm performance. Controlling for various sources of endogeneity bias, our most conservative results show that firms that start selling services increase their profitability by 0.4%, their employment by 2.1%, and their total sales by 0.6%. For small businesses, we also find a positive impact on the production of goods. We also uncover strong heterogeneity across manufacturing industries.

DOI

10.1111/jems.12211

Print ISSN

10586407

E-ISSN

15309134

Publisher Statement

Copyright © 2017 Wiley Periodicals, Inc.

Access to external full text or publisher's version may require subscription.

Additional Information

This article also published as Crozet, M., & Milet, E. (2015). Should everybody be in services? The effect of servitization on manufacturing firm performance. CEPII Working Paper, (2015-19). France: CEPII. Retrieved from http://www.cepii.fr/PDF_PUB/wp/2015/wp2015-19.pdf

Full-text Version

Publisher’s Version

Recommended Citation

Crozet, M., & Milet, E. (2017). Should everybody be in services? The effect of servitization on manufacturing firm performance. Journal of Economics & Management Strategy, Advance publication, 1-22. doi: 10.1111/jems.12211