Digital technology usage as a driver of servitization paths in manufacturing industries

Abstract

Purpose This study aims to conceptually propose and empirically validate a path perspective on the servitization process of manufacturing firms. It identifies a customer and an outcome path to servitization, sheds light on the pivotal role of digital technology usage for both value-creating paths and explores their financial and relational performance outcomes. Design/methodology/approach The authors use a mixed-method approach, combining a qualitative study with a cross-sectional survey in the USA, the UK and Germany. Findings Manufacturing firms choose between two generic paths to servitization, a customer and an outcome path. Digital technology usage is equally important for both value-creating paths. Progress on the outcome path has a positive effect on firms’ financial performance, whereas the customer path has an indirect effect only, fully mediated by firms’ relational performance. Customer tenure and customer’s open-mindedness are contingency variables in the digital technology usage – servitization path – firm performance framework. Research limitations/implications A path perspective is useful to conceptualize the servitization processes in manufacturing industries. Future research should investigate the sequential choice of servitization paths and explore its drivers and performance outcomes. Practical implications To create and claim superior value for their customers, managers can choose between two servitization paths, leading to differential performance outcomes. While digital technology usage is key to progress on both paths, it is particularly effective for newly acquired customers on the customer path. Suppliers should target their value-creating service offerings at open-minded customer firms to reap their full performance potential. Originality/value Propose and empirically validate a path-perspective on servitization. Understand the pivotal importance of digital technology usage for both servitization paths.