The environment-strategy-structure fit and performance of industrial servitized SMEs

Abstract

Purpose The purpose of this paper is to examine the environment-strategy-structure fit in the context of industrial servitization and its impact on the profitability of manufacturing SMEs. Design/methodology/approach Data were collected from face-to-face interviews with the CEOs of 184 French manufacturing SMEs. These primary data were complemented by the indicators extracted from a financial database to ensure objective measures of financial performance. Analyses were conducted by means of partial least squares structural equation modeling. Findings The research tests the impact of the organizational design (customer interface, service delivery system and service culture (SC)) on financial performance. It also tests the moderating effect on this relationship of servitization strategies adopted by the firm (added services (AS), activities reconfiguration (AR) and business model reconfiguration (BMR)) and the environment in which the firm is situated (industry dynamism, competitive intensity and industry munificence). Research limitations/implications This study considers the coalescence of the environment-strategy-structure to be a driver of firm performance in the context of industrial firms’ servitization. Three specific servitization strategies (AS, AR and BMR) are suggested based on the service offering’s impact on the customer’s activity chain or business model. Practical implications The research proposes some optimal organizational design depending on servitization strategy and environmental factors; for example, SC has a strong impact on financial performance when BMR is adopted. Originality/value This empirical study is based on an extended sample of 184 SMEs and provides quantitative support for the claim that good alignment between strategy and organizational design based on environmental factors increases profitability.