Manufacturing practices and servitization: The role of mass customization and product innovation capabilities

Servitization has been viewed as an important method for manufacturers to gain competitive advantages. The purpose of the study is to empirically examine the effects of lean and agile practices as well as mass customization and product innovation capabilities on the implementation of servitization. The hypotheses are empirically examined using structural equation modeling with data collected from 647 manufacturers. The results show that product innovation capability directly improves servitization. Although the direct effect of mass customization capability on servitization is not significant, it improves servitization indirectly through product innovation capability. The findings also reveal that the direct impacts of lean and agile practices on servitization are not significant. Lean and agile practices affect servitization indirectly through product innovation capability, whereas the indirect effects of lean and agile practices on servitization through mass customization capability are not significant. Therefore, this study draws the conclusions that a manufacturer should develop mass customization and product innovation capabilities simultaneously when implementing servitization. Moreover, a manufacturer should also invest on lean and agile practices and product innovation capability at the same time when transforming to a service-based business model to cultivate their synergies on servitization.