The impact of digitalization and servitization on the financial performance of a firm: an empirical analysis

Manufacturing firms have vigorously pursued opportunities for profitability and growth through servitization and digitalization processes. However, the current body of research provides contradictory results on the impact of servitization and digitalization on firm financial performance. This paper seeks to address how manufacturing companies can turn technology into business process transformation. To address this gap this paper develops and tests a framework for assessing the impact of servitization and digitalization on firm financial performance. This study analyses a survey of 185 U.S. and European manufacturing firms showing empirical evidence that digitalization and servitization had a direct positive effect on a firm's financial performance. This research gives managers some insights to better understand the digital transformation in servitization process. These results also have significant theoretical implications to the servitization literature, since achieving superior bottom-line results is contingent on the integration of the digital and service-specific capabilities that reinvent the nature of an offering.

Automated summary

This study analyzed survey data from 185 US and European manufacturing firms and found that digitalization and servitization have a positive impact on firm financial performance. The results provide insights for managers to better understand the importance of digital transformation in the servitization process, highlighting the importance of integrating digital and service-specific capabilities for superior bottom-line results.