Servitization in cross-border relationships: investigating the effects of global supply chain dependence on the servitization level of the manufacturers

Abstract

PurposeServitization is a business transformation that increases service provision in manufacturers. This study aims to empirically examine how a manufacturer's global supply chain dependence and its power positions affect its servitization output.Design/methodology/approachThis study employs secondary longitudinal datasets and econometric specifications to test the relationship between global supply chain dependence and servitization. It further examines the moderating roles of the firm's market power and the degree of being principal customers and principal suppliers. Heterogeneity analyses are performed to verify the robustness of the results.FindingsThe findings indicate that fewer global suppliers and more global customers contribute to a higher level of servitization. The negative effect of global supplier dependence is mitigated when manufacturers have less market power and are the principal customers for most of their suppliers. The positive effect of global customer dependence is stronger when manufacturers have less market power and their customers are less dependent on the manufacturers.Research limitations/implicationsData mixing manufacturing and service inputs and data on public US manufacturers may restrict the generalizability of the findings. Nonetheless, the study urges future research to focus more on other countries/markets.Practical implicationsThis study encourages manufacturers who servitize their businesses to connect with more global customers and fewer global suppliers and manage powers among stakeholders. Other recommendations for policymakers and industry associations are also proposed.Originality/valueThis study is the first to explore the impacts of the global supply chain dependence on servitization. Multiple-level findings offer important implications for researchers and practitioners.