Servitization of Global Manufacturing Business

Abstract

This study examines important but understudied issues in the servitization of global manufacturing firms. We begin with a review of the literature that suggests that global manufacturing firms can grow by integrating services into traditional products in a rapidly changing business environment. We fill a gap in the literature by considering exogenous (i.e., country-level and industry-level) and endogenous (i.e., firm-level) antecedents of servitization. We posit that home-country institutional development has a positive effect on global manufacturing firms' servitization. We also posit that a high level of industry competition is favorably associated with servitization and that a firm's technological capability and geographic diversification are related to servitization. To test these arguments, we made a comprehensive data set by using the Thomson Reuters database, which provides the financial information of 301 global manufacturing firms in the 2015 Forbes Global 1,000, and by using annual reports published on the websites of the firms.