Servitization and Performance in Manufacturing Firms: The Mediating Role of Radicalness

Abstract

Drawing on the knowledge-based view and insights from a literature review, the author built up a conceptual framework aiming at investigating the complex relationships between three learning processes and servitization and, more importantly, the interplay between servitization, radicalness, and firm performance. This conceptual framework was tested using data gathered from senior managers of manufacturing firms in Vietnam. PLS-SEM was utilized to analyze the measurement and structural models. The results illustrate that exploitative learning has a positive impact on servitization. Additionally, servitization was found to influence firm performance through radicalness. To that end, manufacturing firms are encouraged to develop an acceptable level of exploratory learning and a significant level of exploitative learning to facilitate servitization. Particularly, servitization was found to be a promising strategy for manufacturing firms in developing countries and could help these manufacturing firms obtain substantial benefits. Given that manufacturing firms in developing countries normally lack critical resources and capabilities, servitization has an even more critical role to play in bringing about a competitive advantage. Managers in manufacturing firms should also offer a variety of integrated services because these services could bring firms novel ideas for innovations that can result in considerable competitive advantage.