Abstract | Manufacturing firms have vigorously pursued opportunities for profitability and growth through servitization and digitalization processes. However, the current body of research provides contradictory results on the impact of servitization and digitalization on firm financial performance. This paper seeks to address the interdependency between servitization and digitalization and how they enhance operations and the business bottom line, it also addresses how manufacturing companies can turn technology into business process transformation. To address this gap this paper develops and tests a framework for assessing the impact of servitization and digitalization on firm financial performance. This study analyses a survey of 185 U.S. and European manufacturing firms showing empirical evidence that digitalization and servitization had a direct positive effect on a firm’s financial performance, in terms of revenue generation, profit and market value. This research gives managers some insights to better understand the digital transformation role in enhancing the servitization process. These results also have significant theoretical implications to the servitization literature, since achieving superior bottom-line results is contingent on the integration of the digital and service-specific capabilities that reinvent the nature of an offering, this enables a manufacturing firm and its customers to operate radically better than before. |
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