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

Journal of Economics and Management Strategy - Tập 26 Số 4 - Trang 820-841 - 2017
Matthieu Crozet1, Emmanuel Milet2
1RITM, University Paris Sud/Paris Saclay, France
2University of Geneva, Geneva School of Economics and Management, Switzerland

Tóm tắt

AbstractThe 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.

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Journal of Economics and Management Strategy

Tập 26 Số 4

820-841

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