Non-linear relationship between industrial service offering and sales growth: The moderating role of network capabilities

Abstract

In an effort to approach the mixed findings regarding the relationship between a firm's industrial service offering and its performance, this study analyzes the impact of the industrial service offering on sales growth and the moderating role of network capabilities. The proposed research model is tested based on data from 91 Finnish manufacturing firms. Our results demonstrate a non-linear effect of the service offering on sales growth. We also find that network capabilities enhance the effect of the service offering on sales growth. For managers of manufacturing firms, the results imply that the active development of a comprehensive service offering should be implemented in conjunction with the development of organizational capabilities, such as network capabilities, to create value and promote improved performance.

Uncovering Productivity Gains of Digital and Green Servitization: Implications from the Automotive Industry

“…An important finding of this study is the relevance of digital servitization for firm productivity, confirming Hypothesis 1. This result can be ascribed mainly to the technological attributes of digital services, which enable better coordination of operations [14,16,17], driving firm performance and competitiveness [23][24][25][26][27]; and to the nature of the automotive industry, which is characterized by high investment in R&D and high technological sophistication [8,67,78].…”

“…All of the above result in higher operating margins [23][24][25], while implementation of digital servitization gives companies sophisticated mechanisms to exploit value from data [62,63,69,71], facilitating and streamlining decision-making processes to respond to internal and external contingencies in a timely and effective manner [15,17]. Thus, digital servitization enables faster response to customer demands [14,18,65,67] and improves the quality of service provision [16,69], increasing the firm's performance and competitiveness [26,27]. As a result of these considerations, we propose the following hypothesis:…”

Seeking competitive advantage with service infusion: a systematic literature review

“…Entering into co-operation with the customer, organizing in a customer-focussed way, involving the network of actors working with solutions, and producing customer-oriented results can provide a competitive advantage (Gebauer et al, 2010b;Nordin and Kowalkowski, 2010). The literature has identified many requirements for this development, for example, the interplay between supplier and customer and other stakeholders must be orchestrated with special capabilities (Kohtamäki et al, 2013b;Paiola et al, 2013;Davies et al, 2007;Windahl and Lakemond, 2006). Additionally, the formation of organized value constellations should be facilitated, in which effective information sharing and adjusting the visibility line has a significant role (Holmström et al, 2010).…”

“…Barriers to imitation are becoming greater as offerings shift from product orientation toward supporting customer processes (Mathieu, 2001a). However, although the subject has gained attention in recent years, the literature is scarce on empirical proof that services, as a resource, provides financial value (Dachs et al, 2014;Kohtamäki et al, 2013b;Neely, 2008). JOSM 26,3 4.3 Research expanding on the dynamic capabilities perspective Substantial research addresses the capabilities required in shifting to a service orientation.…”

“…Furthermore, Kohtamäki et al (2013a) argued that specific network capabilities are required to develop and utilize interorganizational relationships in service innovation contexts. Kohtamäki et al (2013b) also combined the literature on network orchestration and service infusion to identify three categories of capabilities: network management, network integration, and network learning. These arguments are consistent with Spring and Araujo (2013), who, building on the "service factory" concept of Chase and Garvin (1989), emphasized the importance of capabilities that enable the firm to act with, instead of acting in response to, the firms in its network.…”