Servitization of SMEs: Focused on the Electrical Equipment and Metal Parts Manufacturers in South Korea

Servitization is becoming an essential strategy for manufacturers to gain competitive advantage, and several successful cases have already been reported. However, these success stories are mainly studied for large enterprises such as GE, IBM, Xerox, and Rolls-Royce. Therefore, it is difficult to apply the cases to the servitization of SMEs, thus in this study, the status of SMEs' servitization was examined and the applicability was studied. Among those SMEs, manufacturing of electrical equipment and basic metal parts were selected because they are related to all manufacturing industries. As a research method, companies in the relevant industry were randomly selected and CEOs, managers, and employees were interviewed. Through in-depth interviews, the company's current servitization status in the perception of different employment levels and new servitization opportunities are analyzed. As a result of the interview, the level of servitization in the industry seems to be very low, and it seems that there are very few new servitization opportunities due to the characteristics of general SMEs, such as lack of capital and human resources. Nevertheless, companies were aware that servitization was necessary for sustainability, and they could confirm their will to take on a challenge if there was an opportunity in the future.

Automated summary

Servitization is a vital strategy for manufacturers to stay competitive, but existing success stories primarily focus on large enterprises. This study examines the status and applicability of servitization for SMEs in the electrical equipment and basic metal parts manufacturing industries. Through interviews with CEOs, managers, and employees, the research analyzes the current state of servitization and identifies potential opportunities. The findings suggest that servitization is currently low in the industry, mainly due to the limited resources of SMEs, but companies recognize its importance and express willingness to embrace it in the future if given the chance.