Manufacturing servitization in the digital economy: a configurational analysis from dynamic capabilities and lifecycle perspective
| DOI | https://doi.org/10.1108/IMDS-05-2022-0302 |
| Published date | 20 September 2022 |
| Date | 20 September 2022 |
| Pages | 79-111 |
| Subject Matter | Information & knowledge management,Information systems,Data management systems,Knowledge management,Knowledge sharing,Management science & operations,Supply chain management,Supply chain information systems,Logistics,Quality management/systems |
| Author | Jun Zhan,Ziyan Zhang,Shun Zhang,Jiabao Zhao,Fuhong Wang |
Manufacturing servitization in the
digital economy: a configurational
analysis from dynamic capabilities
and lifecycle perspective
Jun Zhan
School of Economics and Management, Shanghai Maritime University,
Shanghai, China;
School of Foreign Languages, Fujian Jiangxia University, Fuzhou, China and
School of Economics and Management, Yunnan Normal University, Kunming, China
Ziyan Zhang
School of Economics and Management, Shanghai Maritime University,
Shanghai, China
Shun Zhang
School of Economics and Management, Shanghai Maritime University,
Shanghai, China and
Cisco Systems (China) Research and Development Co., Ltd., Shanghai, China
Jiabao Zhao
Institute of AI Education, East China Normal University, Shanghai, China, and
Fuhong Wang
School of Business, Shanghai Jianqiao University, Shanghai, China
Abstract
Purpose –Despite servitization being widely regarded as an essential catalyst to improve manufacturing
firms’survival and competitiveness, how to attain servitization remains debatable. The primary objective of
this research is to explore whether or not, how, and when the dynamic capabilities affect servitization in the
digital economy background. This research investigates the relationships between servitization and dynamic
capabilities by incorporating firm ownership, firm lifecycle stage, digital economy level and environmental
uncertainty as contingency factors in the research framework.
Design/methodology/a pproach –This research develops and verifies a conceptual framework for
manufacturing servitization by employing the fuzzy-set qualitative comparative analysis (fsQCA) in analyzing the
secondary longitudinal data from 148 China-listed manufacturing firms involved in servitization from 2015 to 2020.
Findings –The analytical results of fsQCA identify several configurational solutions for the success of
manufacturing servitization. Each factor can be an enabler for servitization success despite none of the factors
discovered as an absolute condition. Manufacturing servitization success within the digital economy depends
on the interactions between dynamic capabilities and contingency factors such as digital economy level,
environmental uncertainty, firm ownership, and lifecycle stage.
Research limitations/implications –All of the construct’s measurements in this research adopt secondary
data, and further investigation calls for primary data (e.g. survey) for higher validity.
Originality/value –This research extends the current view of servitization by proposing an integrative
conceptual framework, allow ing manufacturing servit ization to be examined more per tinently and
Analysis of
manufacturing
servitization
79
This research is sponsored by The National Social Science Fund of China (Project No. 13BGL025). The
original data used in this study are also supported by the database from Shanghai Maritime University
Library and East China Normal University Library. Jun Zhan, Ziyan Zhang and Shun Zhang
contributed equally to this paper. The authors would like to thank the editor and anonymous referees for
their valuable suggestions and comments.
The current issue and full text archive of this journal is available on Emerald Insight at:
https://www.emerald.com/insight/0263-5577.htm
Received 12 May 2022
Revised 24 July 2022
Accepted 28 August 2022
Industrial Management & Data
Systems
Vol. 123 No. 1, 2023
pp. 79-111
© Emerald Publishing Limited
0263-5577
DOI 10.1108/IMDS-05-2022-0302
comprehensively. Second, the research is an initial attempt that adopts fsQCA in servitization studies. The
study sheds light on the mechanisms of attaining servitization by revealing the importance of dynamic
capabilities and their interactions with the contingency factors. Third, the research extends the application
scopes of dynamic capability theory, firm lifecycle theory, contingency theory, and institutional theory. Fourth,
the research findings enrich the understanding of servitization in the digital economy and give business
practitioners insights on leveraging dynamic capabilities in different conditions to attain successful
servitization under the current circumstances.
Keywords Digital economy, Firm lifecycle, Manufacturing servitization, Dynamic capabilities
Paper type Research paper
1. Introduction
In recent decades, the world has witnessed a rapid growth of the digital economy and a changing
landscape of competition initiated by new technologies. The digital economy, also known as the
economy based on digital technologies, refers to the worldwide network of economic activities,
commercial transactions , and professional interac tions enabled by informati on and
communications technologies (ICT) (Tapscott, 2014).The digital economy signals the advent
of the fourth industrial revolution, which builds on the digital revolution as the development of
ICT continues to link the physical and cyber worlds (Wu et al.,2016).Th e digital economy creates
waves of destruction, making the business environment more turbulent and complicated (Wu
et al., 2016). In response to these challenges, firms must be well inspired to take competitive
advantages of servitization by utilizing new information technologies (Sun et al.,2020)sothat
their performance can be made better, faster and more different than before.
The new technologies led by ICT have intensified the competition in manufacturing
industries (Ruiz-Mart
ınandD
ıaz-Garrido, 2021), bringing changes to competition modes which
impel manufacturers to seize business opportunities by launching the process of offering
services together with their products (Johnson et al., 1999). This service-oriented extension is
often mentioned as servitization (Vandermerwe and Rada, 1988), by which the manufacturers
intend to provide their businesses with new competitive advantages (Kanninen et al.,2017).
Servitization is often viewed as a strategic renewal (Helfat and Winter, 2011;Pilawa et al., 2022)
or a service innovation in manufacturing contexts (Kindstr€
om et al., 2013;Teece, 2012), which
involves a key shift to a new strategic direction, a new organizational structure and new abilities
(Gustafsson etal., 2020;Raddats and Easingwood, 2010). Ev en though servitization has different
definitions in the service and industrial management literature, the consensus is that
manufacturing firms must become customer-centric and innovative enough to extend their
business by integrating products and services (Bonfanti et al.,2015). In this context, the
interactions between products manufacturing and services offering have rapidly increased in
the last decade (Francois et al.,2009;Bryson and Rusten, 2010;Falk and Peng, 2013), resultingin
an obscured boundary between service and manufacturing industries. The ICT-based digital
technologies like big data and cloud computing, artificial intelligence (AI), virtual and
augmented reality (VR/AR), and the Internet of Things (IoT) largely expedite the process of
integrating goods andservices (Sun et al.,2020;Wu et al., 2016), which approvesmanufacturing
firms more likely to add their products with services by taking advantage of these new
technologies led by ICT (Vandermerwe and Rada, 1988;Kanninen et al., 2017). Under these
circumstances, servitization is widely initiated by the manufacturers that intend to attain or keep
comparative advantages by extending the value chain and in creasing added value (Naik et al.,
2020;Chen et al., 2021). As a result, servitization has become a significant concern for
manufacturers and an industrialized economy, which is well addressed in the literature on the
evolution from a goods-dominant view to a service-dominant view and extensive deliberations
on service science (Vargo and Lusch, 2017).
In the past 20 years, the dynamic capability view (DCV) has been adopted in the
mainstream research on strategic management, providing insights on how firms can sustain
outperformance or competitive advantages in a rapidly changing environment (Tsou and
IMDS
123,1
80
Chen, 2020). The DCV is a relatively new perspective through which firms’competitive
advantages are better interpreted than the resource-based view (RBV) (Eisenhardt and
Martin, 2000;Teece, 2007), as the DCV compensates for the limitation of the RBV by
rethinking the advantages from a dynamic view instead of a static view (Eisenhardt and
Martin, 2000;Teece, 2012). Dynamic capabilities are significant to servitization research due
to their dynamic and change-oriented nature (Kindstr€
om et al., 2013;Fliess and Lexutt, 2019),
thus offering a more rationalized perspective to explain servitization. Likewise, the DCV
considers sustainable competitive advantage as the ability to create, extend, and modify
valuable resources and capabilities over time (Helfat and Winter, 2011), underscoring the
capabilities to achieve constant alignments with changes in the turbulent environment by
intelligently detecting and handling contingency factors of different kinds and their possible
influences, thereby presenting a broader view of looking at servitization by incorporating
servitization and its related factors into a single study. So, the DCV offers a more practical and
expansive perspective for understanding servitization, especially in current unusual
circumstances where digitalization-driven uncertainties and opportunities coexist.
Service innovation and its related dynamic capabilities are viewed as crucial drivers of
consistent high performance over time and have become a big concern for firms today (Teece,
2012;Kindstr€
om et al., 2013). In current literature, there is a great deal of research on dynamic
capabilities and their relationships with service innovation and firm performance (Kindstr€
om
et al., 2013;Teece, 2012), which arrive at conclusions supportive, in general, of dynamic
capabilities and performance despite their relationships supposed to be a complicated issue
that deserves further investigation (Wilden et al., 2013;Gustafsson et al., 2020).
Despite plenty of literature on the link between dynamic capabilities and firm performance
in manufacturing and service sectors, studies on the role of dynamic capabilities in the
servitization process stay limited, and the mechanisms in attaining successful servitization
remain unclear. In particular, although it is well known that the manufacturer’s servitization
process is under the influence of their internal and external contexts, such as environmental
uncertainty, firm ownership type, and lifecycle stage (Dmitrijeva et al., 2019;Park et al., 2020),
how they affect the relationships between dynamic capabilities and servitization at different
levels of the digital economy has remained as a pending question.
Dynamic capabilities are viewed, in current research, as a multidimensional concept
(Teece et al., 1997;Teece, 2012;Kindstr€
om et al., 2013). Given the complex interdependencies
between dynamic capabilities and the multiple factors above mentioned, a better
understanding of the servitization can be accessible by revealing the evidence on how
dynamic capabilities are structurally aligned with each other, as well as the multiple factors,
rather than by looking into any individual factors in isolation. Therefore, in this research, we
intend to answer an overarching research question: How can manufacturing firms effectively
achieve successful servitization by leveraging dynamic capabilities while considering the
multiple factors?
Specifically, this research attempts to fill the research gap by developing a conceptual
framework on manufacturing servitization by incorporating factors like digital economy
development, dynamic capabilities, environmental uncertainty, firm ownership, and firm
lifecycle stage. Building on this framework, we employ a configurational analysis which is
well accepted as the most suitable method to disentangle the complex interdependencies
among several multidimensional or cross-hierarchical factors (Fiss, 2011), clarifying multiple
or complex cause-effect relationships by joining structure, strategy, and environment (Fiss,
2011). Thus, we conduct the fuzzy-set qualitative comparative analysis (fsQCA) on the
secondary longitudinal data collected from the 148 China-listed manufacturing firms
involved in servitization from 2015 to 2020. The findings of this research are unconventional
yet methodical, enlightening the manufacturing firms that intend to achieve servitization
success under the current circumstances.
Analysis of
manufacturing
servitization
81
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