The Role Of Servitization In The Capabilities - Performance Path

Purpose Firms innovate and sophisticate their offerings to remain competitive. This sophistication often finds opportunities in servitization. Given that many customers expect the service offering from manufacturing companies, it is crucial to research what capabilities drive service offerings and their impact on performance. The purpose of this paper is to test the capabilities-service-performance chain. Design/methodology/approach A conceptual model is proposed and the research hypothesis is tested using structural equation modelling (SEM) performed on a data set corresponding to 205 Spanish and Croatian manufacturing firms. Findings Using SEM, this research analyses the causal model between manufacturing, organizational and digital capabilities on base, intermediate and advanced services, and their impact on both service and financial performance. Research limitations/implications This study has some limitations: the advanced service construct was mostly developed on case-based research. Some constructs have low convergent validity and reliability. The relative smallness of the data set used and its two-country provenance could raise issues about the international nature and generalizability of the findings. Practical implications Digital capabilities are important for the provision of all three groups of services in terms of using digital devices in data acquisition, helping to make the manufacturing company more agile. Originality/value The present study also contributes to the conceptual framework of servitization by providing a new and more up-to-date definition of capabilities and services, also considering digital capabilities, which are less explored. It also contributes to being the first to explore the entire manufacturing sector [nomenclature statistique des activites and economiques dans la Communaute europeenne (NACE) 10-31].