Performance implications of servitization: Does a Manufacturer's service supply network matter?

To clarify the puzzling performance implications of servitization for manufacturers, this study examines how a manufacturer's service supply network moderates the non-linear performance effect of servitization. We test the hypotheses using survey responses collected from 143 servitized manufacturers in China. Our three-step statistical test confirms that servitization has a U-shaped relationship with a manufacturer's financial performance. We also find partial support for the moderating effects of the service supply network, which are characterized by tie strength and structural holes. Specifically, we show that stronger ties between a manufacturer and major service suppliers intensify the U-shaped servitization-performance relationship. However, we do not find support for a moderating effect of service network structural holes, despite their direct negative effect on manufacturer financial performance. By bridging the servitization and supply network literature, this study reveals novel findings that can help manufacturers understand how to leverage their service supplier networks to increase the financial return from their servitization endeavors.