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In many business markets, manufacturers seek service-led growth to secure their existing positions and continue to grow in increasingly competitive environments. Using longitudinal data from 513 German mechanical engineering companies and latent growth curve modeling, this study offers a fine-grained view of the financial performance implications o...
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... Insert Figure 1 and Table 4 about here – In H , we predict that firms with a broader SSP portfolio will have a broader SSC portfolio too. In line with this, we find a significantly positive relationship between SSPs and SSCs (β = . 484, < .01). Also in support of H and H , we find significant, positive paths between SSCs and both revenue level (β = .08, < .01) and revenue growth (β = .15, = .05). In Figure 2, Panel A, we illustrate exemplary revenue trajectories for firms with a narrow (mean – 1 SD) and a broad (mean + 1 SD) SSC portfolio. Consistent with our hypotheses, firms with a broader SSC portfolio possess a higher level of revenue and greater percent increase in revenue each year. Particularly, the average revenue increase per year is 4.65 % for companies with a broad SSC portfolio, and 1.75 % only for companies with a narrow SSC portfolio. Furthermore, we uncover a significant negative path between SSCs and profit level (β = – .13, < .05) and a significant positive path between SSCs and profit growth (β = .20, p < .05), in support of both H and H . The profit trajectories for firms with a narrow and a broad SSC portfolio (mean ± 1 SD) appear in Figure 2, Panel B. Although companies with a broad SSC portfolio start from a relatively low level of profit, they slightly outperform companies with a narrow SSC portfolio at the end of the study period, i.e., after three years. In H , we hypothesize that the breadth of the SSC portfolio mediates the effects of the breadth of the SSP portfolio on both revenue and profit trajectories. Although all the direct effects of SSPs on the revenue and profit trajectories are insignificant, we find significant indirect effects (.000 < < .075) on the outcome variables through SSCs when we apply the ...
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... Insert Figure 1 and Table 4 about here – In H , we predict that firms with a broader SSP portfolio will have a broader SSC portfolio too. In line with this, we find a significantly positive relationship between SSPs and SSCs (β = . 484, < .01). Also in support of H and H , we find significant, positive paths between SSCs and both revenue level (β = .08, < .01) and revenue growth (β = .15, = .05). In Figure 2, Panel A, we illustrate exemplary revenue trajectories for firms with a narrow (mean – 1 SD) and a broad (mean + 1 SD) SSC portfolio. Consistent with our hypotheses, firms with a broader SSC portfolio possess a higher level of revenue and greater percent increase in revenue each year. Particularly, the average revenue increase per year is 4.65 % for companies with a broad SSC portfolio, and 1.75 % only for companies with a narrow SSC portfolio. Furthermore, we uncover a significant negative path between SSCs and profit level (β = – .13, < .05) and a significant positive path between SSCs and profit growth (β = .20, p < .05), in support of both H and H . The profit trajectories for firms with a narrow and a broad SSC portfolio (mean ± 1 SD) appear in Figure 2, Panel B. Although companies with a broad SSC portfolio start from a relatively low level of profit, they slightly outperform companies with a narrow SSC portfolio at the end of the study period, i.e., after three years. In H , we hypothesize that the breadth of the SSC portfolio mediates the effects of the breadth of the SSP portfolio on both revenue and profit trajectories. Although all the direct effects of SSPs on the revenue and profit trajectories are insignificant, we find significant indirect effects (.000 < < .075) on the outcome variables through SSCs when we apply the ...
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... recommended by Preacher and Hayes (2008). We thus confirm that the effects of SSPs on revenue and profit trajectories are fully mediated by SSCs. To test our moderating hypotheses, we estimated multiple-group LGCM. Multiple-group analysis is a well-established, widely accepted method for detecting moderating effects in structural equation models (e.g., Homburg, Droll, and Totzek 2008; Palmatier, Scheer, and Steenkamp 2007). For each moderator, we used a median split to divide the sample into two subgroups, then tested whether the hypothesized path is moderated through a comparison of the two models. In the first model, we allowed the hypothesized path to vary freely across groups; in the second, we constrained the path to be equal across groups. To compare these models, we used a chi-square difference test. We summarize the results of the multiple-group analyses in Table 5. – Insert Table 5 about here – The moderation test reveals that firms with low and high decentralization differ significantly in terms of the impact of SSCs on their revenue growth (∆χ 2 (1) = 4.83, p < .05) and profit growth (∆χ 2 (1) = 6.28, p < .05). In particular, SSCs have a significantly positive effect on both revenue and profit growth for companies with high decentralization (β = .40, p < .01; β = .47, < .01, respectively). Both effects become insignificant for firms with low decentralization (β = .01, > .10; β = .01, .10, respectively). Accordingly, Figure 2, Panels C and D, reveal that the highest growth of the revenue and profit trajectories occurs for companies with a broad SSC portfolio and high decentralization. Thus, we find support for H and H . Finally, in support of H , the share of loyal customers positively moderates the effect of the breadth of the SSC portfolio on firms’ profit growth (∆χ 2 (1) = 3.84, p < .05). When firms have a low share of loyal customers, SSCs exert no significant effect on profit growth (β = .03, > .10), but for firms with a high share of loyal customers, SSCs have a significant and ...
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... (β = .36, < .01). As we depict in Figure 2, Panel E, when companies have a high share of loyal customers, profit growth is highest if they also have a broad SSC portfolio. Although their profit trajectory starts from the lowest level, these companies achieve the highest level of profit at the end of the three-year period. In contrast, for companies with a low share of loyal customers, profit growth does not differ, regardless of the breadth of their SSC portfolio. – Insert Figure 2 about here – A growing consensus among managers and scholars suggests that goods-dominant companies should seek service-led growth to secure their existing positions in business markets and continue to grow (Ostrom et al. 2010). Yet rather than just a general agreement about manufacturers move toward services, we need a better understanding of they can ensure that this move proves profitable over time (Reinartz and Ulaga 2008). Both anecdotal evidence (Renault, Dalsace, and Ulaga 2010; Stanley and Wojcik 2005) and emerging academic results (Fang, Palmatier, and Steenkamp 2008) suggest a need for further research on how service strategies contribute to firms’ success and the conditions in which these initiatives lead to revenue and profit growth. The present study makes several important contributions to the academic literature and managerial practice. First, we specifically disentangle the effects of industrial service strategies on different performance indicators. Prior studies have focused predominantly on single outcome variables, such as revenue (Antioco et al. 2008), profitability (Gebauer, Edvardsson, and Bjurko 2010), or firm value (Fang, Palmatier, and Steenkamp 2008), without differentiating among key levers of firm performance. We analyze the effects of industrial service strategies on manufacturers’ revenue and profit trajectories. Revenues and profits received from service strategies do not necessarily evolve in the same direction. Against this backdrop, we find ...
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... (β = .36, < .01). As we depict in Figure 2, Panel E, when companies have a high share of loyal customers, profit growth is highest if they also have a broad SSC portfolio. Although their profit trajectory starts from the lowest level, these companies achieve the highest level of profit at the end of the three-year period. In contrast, for companies with a low share of loyal customers, profit growth does not differ, regardless of the breadth of their SSC portfolio. – Insert Figure 2 about here – A growing consensus among managers and scholars suggests that goods-dominant companies should seek service-led growth to secure their existing positions in business markets and continue to grow (Ostrom et al. 2010). Yet rather than just a general agreement about manufacturers move toward services, we need a better understanding of they can ensure that this move proves profitable over time (Reinartz and Ulaga 2008). Both anecdotal evidence (Renault, Dalsace, and Ulaga 2010; Stanley and Wojcik 2005) and emerging academic results (Fang, Palmatier, and Steenkamp 2008) suggest a need for further research on how service strategies contribute to firms’ success and the conditions in which these initiatives lead to revenue and profit growth. The present study makes several important contributions to the academic literature and managerial practice. First, we specifically disentangle the effects of industrial service strategies on different performance indicators. Prior studies have focused predominantly on single outcome variables, such as revenue (Antioco et al. 2008), profitability (Gebauer, Edvardsson, and Bjurko 2010), or firm value (Fang, Palmatier, and Steenkamp 2008), without differentiating among key levers of firm performance. We analyze the effects of industrial service strategies on manufacturers’ revenue and profit trajectories. Revenues and profits received from service strategies do not necessarily evolve in the same direction. Against this backdrop, we find ...
Citations
... To check for heterogeneity in the effect of the number of add-ons sold on onboarding stage retention, we adopt a service typology widely used in B2B service literature (e.g., Antioco et al., 2008;Eggert et al., 2014;Faramarzi et al., 2024;Mathieu, 2001) and classify the 14 add-ons sold by our collaborating service provider as either product functionality-supporting or customer action-supporting (Table 9). According to this typology, B2B add-on services typically fulfill one of two functions (e.g., Faramarzi et al., 2024;Mathieu, 2001). ...
... Drilling deeper into the negative effect of selling more add-ons as it relates to customer acquisition, we also note potentially heterogeneous effects of different add-on types. By distinguishing product-supporting versus customersupporting add-ons (e.g., Eggert et al., 2014;Mathieu, 2001), we clarify that more product-supporting add-ons detrimentally affect onboarding-stage retention, but more customer-supporting add-ons do not significantly affect it. The negative retention effect thus appears driven mainly by the number of product-supporting add-on services, whereas customer-supporting add-ons that enhance the scope of the core service through additional functionalities are less detrimental. ...
... The negative retention effect thus appears driven mainly by the number of product-supporting add-on services, whereas customer-supporting add-ons that enhance the scope of the core service through additional functionalities are less detrimental. These findings of heterogeneous effects of different add-on types resonate with and extend insights put forth by Eggert et al. (2014). That is, we offer additional support for the notion that customer-supporting add-ons, which support additional gains from using the service, might represent a source of competitive advantage. ...
Business-to-business (B2B) software-as-a-service (SaaS) providers increasingly bundle add-on services with their core service. The implications of such bundles for onboarding customers to the relationship remain unclear; in particular, the common practice of trying to maximize add-on bundling during the customer acquisition phase arguably might conflict with goals to achieve long-term retention of customers. The current study therefore focuses explicitly on the impact of add-on bundling on customer retention during the onboarding stage, using multiple methods. A theories-in-use exploration suggests that the positive effects of add-on bundling may not manifest in the initial relational stage of customer onboarding. A field study involving a B2B SaaS provider further reveals that bundling more add-on services can significantly decrease customer retention during the onboarding stage. Moving to leaner communication channels can aggravate such attrition. Finally, a cross-industry survey of B2B managers identifies complexity perceptions as the likely source of these detrimental effects of add-on bundling during the customer onboarding stage.
... Service Business Focus helps bridge the gap between service innovation Servitization offers, and customer expectations. This result aligns with research (Eggert et al., 2014) and (Kindström & Kowalkowski, 2014), which shows that Service Business Focus is essential in strengthening the relationship between Servitization and Purchase Intention. ...
The development of digital technology has changed the business landscape significantly, especially in terms of improving operational efficiency and customer experience. One strategy that companies are increasingly implementing is servitization, namely a shift from a product-based business model to a service that provides added value for customers. This study aims to analyze the influence of servitization on purchase intention and the role of digital technology and service business focus as mediators in this relationship. This research uses quantitative methods with data collection techniques through questionnaires distributed to 75 respondents consisting of coffee shops and restaurant businesses in Solo Raya. Data analysis was carried out using the Partial Least Squares-Structural Equation Modeling (PLS-SEM) method with the help of SmartPLS 3.0 software. The research results show that servitization positively and significantly affects purchase intention, digital technology, and service business focus. However, digital technology does not directly influence purchase intention, indicating that digital technology alone is insufficient to increase customer purchase intention without an appropriate service strategy. Meanwhile, service business focus has been proven to significantly influence purchase intention and mediate the relationship between servitization and purchase intention. These findings confirm that companies that implement servitization and have a strong focus on business services are better able to increase customer purchasing intentions than relying solely on digital technology. Therefore, companies are advised to adopt digital technologies and ensure that their service strategies can increase customer value.
... To calibrate the set memberships for SSP and SSC, information from Eggert et al. (2011) andEggert et al. (2014) on the average number of SSP and SSC offered by German manufacturing companies was compared with present data. For a case to be considered more in than out of the set of high focus of the service offering on SSP (or SSC, respectively), it must actively offer an above-average number of services in each category (Antioco et al., 2008). ...
Purpose
This study examine how provider- and customer-related factors interact to influence servitization success. It adopts the transaction cost theory along with a configurational approach and hypothesizes that different configurations of five key conditions—service offering, specific investments, perceived customer opportunism, willingness for integration and demand uncertainty—can lead to servitization success or failure.
Design/methodology/approach
The study applies fuzzy-set Qualitative Comparative Analysis (fsQCA) to a sample of 143 German manufacturers, addressing the complex causalities involved in servitization success.
Findings
The analysis identifies six sufficient configurations for servitization success and five for servitization failure. The findings reveal that servitization can succeed through various types of service offerings. While opportunism does not hinder success, the decision to offer an extensive service portfolio is influenced by anticipated opportunism and complex customer needs. Specific investments function primarily as drivers for success, particularly when combined with a limited service offering and complex customer needs. However, these investments can increase transaction costs when linked to an extensive service portfolio. Though not essential, customer integration emerges as a relevant success factor, acting as a safeguard against opportunism.
Practical implications
Servitization can be successful even with opportunism. Developing methods to assess customers’ readiness for integration can mitigate opportunistic behavior and foster successful servitization.
Originality/value
This study advances servitization research by addressing the often-overlooked interplay between provider- and customer-related factors. Applying the transaction cost theory and a cutting-edge fsQCA, it contributes to the theoretical and methodological plurality of the field.
... In this study, we examine how firms can continue to generate value when operating across markets where weak regulation and enforcement creates IP risk: an external threat to their ability to leverage IP as a source of revenues. We posit that service transition represents a reconfiguration of the resource base, away from product-based intangible assets and towards process-based resources that will retain their rarity and inimitability in the face of IP risk (Eggert et al., 2014;Gremler et al., 2019). Accordingly, while service transition ostensibly introduces additional variability into the firm's revenue sources (Fang et al., 2008;Josephson et al., 2016), we hypothesize that this will instead reduce revenue risk (i. ...
... These include IP, and their rarity and inimitability is generally protectable by law. In contrast, process-based intangible assets refer to those that are not made rare or inimitable through regulation but through tacit knowledge and internal processes, such as distribution agreements, and customer subscriptions, and brand equity. 1 Product-based intangible assets are key to performance in nonservice firms, whereas process-based intangible assets are critical in services (Eggert et al., 2014). However, both can be strategic resources for all firms, their relative importance depending on the degree to which a firm relies on products or services to generate competitively defensible revenues. ...
... The pathway depicted in Fig. 1 suggests a primary mechanism through which nonservice firms can ensure the reliability of revenues when operating in conditions of high IP risk: service transition (Fang et al., 2008;Josephson et al., 2016). This involves augmenting a business model based on product-based assets with auxiliary services (Ulaga & Reinartz, 2011), affording protection against imitation due to the complex, unobservable processes involved in service delivery (Eggert et al., 2014) and reducing revenue risk through customer loyalty (Rego et al., 2009). Effectively, service transition represents a shift in the resource base toward a form of intangible assets of which ownership and control is more defensible when IP risk is high (Gremler et al., 2019). ...
... In the literature, servitization is perceived in two ways: (1) as a tool to improve customer loyalty and raise profits [20], or (2) as a process decoupling customer satisfaction from resource consumption [21]. Moreover, different terms used to characterize servitization include the transition from product to service, the product-service system, service infusion, and hybrid offerings [22]. ...
This study presents an analysis of the relationship between the servitization process and energy sustainability in the years 2015–2020. The research refers to 164 selected countries, also divided into two regimes: developed and developing. The transformation of the manufacturing process, and as a result, the economy’s structure, towards servitization, is observed in most countries worldwide. The positive influence of the servitization of production by individual manufacturers on sustainability is widely known. In this research, this relationship is considered on a macroeconomic scale, which is one of the novelties of the study. Particularly, sustainability in the energy sector, indicated as an achievement of the 7th goal of Sustainable Development, is discussed. Energy sustainability is evaluated using a synthetic measure by Perkal. This part of the research shows the problem of the low level of energy sustainability in developing countries (particularly in Africa) compared with developed ones. Moreover, spatio-temporal sensitivity models are estimated and verified. The sensitivity parameter in these models shows the impact of the progress in the servitization process on energy sustainability. The models have been enriched with the effects of spatial dependence between countries, taking into account two types of proximity matrices based on (1) the common border criterion and (2) the similarity of the development levels measured by the Human Development Index. Additionally, the differences in sensitivity between developed and developing countries are considered. The results of the study show that in both cases, the economic servitization positively influences energy sustainability, but the strength of the relationship is stronger in the group of developed countries. This can be, for example, the result of the individual characteristics of the given countries, where African countries mainly benefit from agricultural development. Only after reaching a certain level of economic growth will they be able to obtain sustainability faster through economic servitization.
... Furthermore, manufacturers offering customer-oriented services tend to develop closer contact with customers, which can prompt greater customer satisfaction and create loyalty effects, thus fostering customer retention (Antioco et al., 2008;Preikschas et al., 2017). For example, customer-oriented services facilitate the exploration of the customer's activity cycle, the breadth of which can directly improve revenue and profit (Eggert et al., 2014). Thus, customer-oriented services positively relate to firm performance. ...
... In line with previous research (Chaudhuri et al., 2019;Short et al., 2009), we used sales revenue as the key performance indicator for evaluating the performance of manufacturing firms. Sales revenue effectively captures the economic benefits resulting from services provided by manufacturing firms (Terho et al., 2015) and serves as a prevalent metric to portray the impact of services on firm performance (Eggert et al., 2014;Shah et al., 2020). Following Shi et al. (2017), we computed the natural logarithm of sales revenue to reduce skewness, which is a common operationalization when financial data is the dependent variable. ...
Purpose
How does business model design play a role in enabling manufacturing firms’ services? This study aims to investigate the impact of two distinct types of business model design, namely, efficiency-centered business model design (EBMD) and novelty-centered business model design (NBMD), and their effects in balanced and imbalanced configurations, on two types of services: product- and customer-oriented services.
Design/methodology/approach
Using matched survey data of 390 top managers and objective performance data of 195 Chinese manufacturing firms, this study uses hierarchical regression, polynomial regression and response surface analysis to test the hypotheses.
Findings
The results show that while EBMD positively affects product-oriented services, NBMD positively affects customer-oriented services. Both types of services exert a significant influence on firm performance. Furthermore, the degree of product- and customer-oriented services increases with an increasing effort level with a balance between EBMD and NBMD. Asymmetrical, imbalanced configuration effects reveal that the degree of product-oriented services is higher when the EBMD effort exceeds the NBMD effort, and the degree of customer-oriented services is higher when the NBMD effort exceeds the EBMD effort.
Originality/value
This study enriches the understanding of designing business models to facilitate service growth in manufacturing firms, ultimately benefiting firm performance. In addition, exploring balanced and imbalanced configurations of EBMD and NBMD offers new insights into business model dual design research.
... HD shows slight positive growth (1.6%). W currently has negative TTM EPS but is expected to turn positive in the next twelve months [6]. ...
This paper presents a detailed financial analysis and market evaluation of major players in the home improvement industryHome Depot, Lowe's, Wayfair, and Floor & Decor Holdings. It assesses these companies based on their liquidity, solvency, and profitability to provide investors with actionable insights into their financial health and market position. The analysis reveals that Wayfair, despite its robust short-term liquidity, faces challenges with profitability. Home Depot and Lowe's both demonstrate strong financial stability with efficient operations that translate sales into profit effectively, though Lowe's exhibits some concerns related to its debt levels. Floor & Decor shows impressive growth but must improve its operational efficiency to enhance profitability. Additionally, the study explores industry trends impacting these businesses, including changes in consumer preferences and economic conditions affecting spending on home improvements. It also examines the companies' responses to these trends, such as adapting their business models and strategies to sustain growth and competitiveness. The paper concludes with investment considerations, highlighting Wayfair as a potentially high-reward but risky investment due to its growth prospects and operational challenges. Home Depot remains a relatively safe bet with stable financial returns, while Lowe's and Floor & Decor might require cautious evaluation due to their financial and market positions. This comprehensive analysis serves as a crucial tool for investors aiming to navigate the complexities of the home improvement sector and make informed decisions.
... Based on the obtained complex analytical indicators, socio-economic criteria for assessing the feasibility of implementing an eco-hotel project were compiled; each criterion was assigned a weight and assessed using a 5-point system. As a result, one or more municipal areas with the highest weighted average will be recommended as the most favorable from a socio-economic point of view [12]. ...
Today, the study of environmental and economic analysis in the hospitality industry is of great importance for the industry. Global problems associated with environmental degradation require different approaches to solution. Studying the regional market is an important strategy for the development of this industry. The relevance of the study is the influence of environmentally friendly technologies in different spheres of life. Current statistical data on environmental and economic indicators were selected for analysis. The purpose of the study is to find areas in the northwestern region for the construction of a modern eco-hotel. To achieve the goal, factors influencing the ecological state of the territory and its economic components were selected. Environmental factors will include the number of large and medium-sized reservoirs in the area, the distance of the nearest point of the areas from the airport, the number of large highways, as well as the area of greenery in the area. To compare districts, a 5-point scoring system was used, depending on the quantitative and qualitative indicators of the above factors. As a result of the study, the most suitable areas for the implementation of the project according to the selected indicators were identified.
... Nevertheless, the methodology for assessing the possibility of early retirement due to personal circumstances with the function of involving real estate manipulation will allow to increase the funds of social housing in large cities and become one of the tools of renovation. Also, the proposed set of measures and analytical calculations can be used as calculations to substantiate legislative initiatives in the field of improving the pension system of the Russian Federation [12]. It should be noted that the proposed measures make it possible to create a mathematical basis for a significant change in pension legislation in the Russian Federation. ...
At the present stage of society's development, issues related to improving the environmental quality of life of the population while maintaining the level of quality in other aspects – social and economic - are becoming increasingly developed. One of the possible solutions to this problem is a potential mechanism associated with changing the place of residence of citizens to regions and territories with a more favorable ecological and social situation while reducing the level of economic burden. This mechanism can be implemented in the context of solving the problem of early retirement of citizens, taking into account compensation payments, including at the expense of existing real estate. The purpose of the study: to develop a mechanism for improving the environmental quality of life of the population in the context of solving the problem of reducing pension costs through compensation payments of citizens. Research methods: comparison, analysis and synthesis, generalization, method of retrospective analysis and forecasting of ecosystem development. As a result of the study, approaches are proposed to choose options for improving the environmental quality of life of citizens, as well as substantiating the conditions of compensation payments due to the sale of excess value of real estate objects of citizens potentially suitable for early retirement
... Businesses are typically not set up with the sole purpose of generating profits, but to serve wider society by providing goods and services to the community (Carroll & Shabana, 2010). It could be hypothesized that although profits are a necessary component of running a business, the products and services aim to serve wider benefits, and hence most firms focus on a specific industry sector to operate in (Eggert et al., 2014). Businesses can have multiple competing objectives, and managers need to prioritize between such competing objectives (Wu & Pagell, 2011). ...
The adoption of environmental practices in small and medium scale businesses is increasing. Given the diverse environmental actions available to firms, it is important to understand the specific drivers for different actions to be taken. Based on managerial survey data from Victoria, Australia, this research uses modeling to determine how ethical conscience of managers drive different types of sustainable environmental actions. The results indicate that ethical conscience of managers drives waste, energy and water related actions, while external factors such as supply chain imperatives and customer demand drive circular business actions. New technology and industry guidelines were major barriers for most types of environmental actions while social barriers were significant for energy and water related actions. This implies that the increased ethical conscience of managers, especially while adopting new technology can increase the adoption of environmental actions in businesses. The results will have implications in crafting the corporate strategy and developing good and services that will aid to the achievement of Sustainable Development Goals (SDG 11 and 12), focusing on sustainable cities and communities, and responsible production and consumption.
