The impact of servitization on trade credit in manufacturing firms: a signaling theory perspective

PurposeThe aim of this study is to empirically test the link between servitization and trade credit in manufacturing firms as well as the boundary conditions of this link.Design/methodology/approachUsing a unique dataset of 4,974 observations covering 838 manufacturing firms publicly listed in the United States during 1990-2020, this study examines the impact of servitization on trade credit and the moderating impacts of financial slack and service relatedness based on fixed-effect regression models.FindingsThe authors find that servitization shows a U-shaped relationship with trade credit. Besides, financial slack negatively moderates this U-shaped relationship whereas service relatedness has no significant impact on this relationship.Originality/valueThis paper is the first to empirically verify the influence of servitization on trade credit in manufacturing firms based on longitudinal secondary data and signaling theory. The research findings can provide several important theoretical and managerial implications for scholars and practitioners in operations management.

Automated summary

This study empirically tests the link between servitization and trade credit in manufacturing firms using longitudinal secondary data and signaling theory. The findings reveal a U-shaped relationship between servitization and trade credit, with financial slack negatively moderating this relationship and service relatedness having no significant impact.