Product lifespan: the missing link in servitization

By drawing on a business model lens, this study proposes that the competitive performance of servitization is higher for manufacturing firms selling long-lifespan products since they better develop the key elements required for transitioning towards integrated Business to Business (BtoB) solutions delivery. Additionally, the study argues that the moderation role of product lifespan is stronger in advanced stages of servitization as it reduces replacement and information costs. To test these hypotheses, this study merges a unique survey of Manufacturing Multinational Enterprises (MMNEs) and the Lifespan Database for Vehicles, Equipment and Structures (LiVES). Results show a positive moderating effect of product lifespan in the relationship between servitization and performance. Following this finding, across firms with high-intensity servitization, the firm that sells longest-lifespan products is predicted to capture most value from servitization. Overall, the present study suggests that the implementation of recurrent services during an extended product lifecycle provides an opportunity for BtoB solutions delivery and product usage optimisation. By including product lifespan in the equation, we improve understanding of why servitization is an excellent mechanism for managing long-lasting industrial relationships and explain why servitization boosts performance in some manufacturing industries but has a neutral effect on others.

Automated summary

This study suggests that manufacturing firms selling long-lifespan products perform better in servitization, with product lifespan having a positive moderating effect on the relationship between servitization and performance. Implementing recurrent services during an extended product lifecycle provides an opportunity for BtoB solutions delivery and product usage optimization.