Servitization and organizational resilience of manufacturing firms: Evidence from the COVID-19 outbreak

This study examines how service-oriented business model diversification of manufacturing firms (i.e., serviti-zation) has affected their organizational resilience during the COVID-19 outbreak. We investigate the impact of two types of servitization - product-oriented vs. customer-oriented services - on organizational resilience. Using secondary data collected from 1,914 manufacturing firms listed in the US stock markets, we find that serviti-zation is inversely related to organizational resilience during the COVID-19 disruption; that is, manufacturing firms with more revenue from service businesses endure more significant stock price loss and take longer to bounce back from the loss caused by the COVID-19 disruption. The impact is more pronounced for manufacturing firms providing product-oriented services (than those providing customer-oriented services). This study extends the understanding of the dark side of servitization relating to organizational resilience during a major disruption.

Automated summary

This study examines the impact of service-oriented business model diversification (servitization) on organizational resilience during the COVID-19 outbreak. The findings show an inverse relationship between servitization and organizational resilience, with manufacturing firms with more revenue from service businesses experiencing greater stock price loss and longer recovery time. The impact is more significant for firms providing product-oriented services. This study expands our understanding of the negative consequences of servitization on organizational resilience during major disruptions.