Sustainable servitization in product manufacturing companies: The relationship between firm's sustainability emphasis and profitability and the moderating role of servitization

Marko Kohtamäki, Krishna Raj Bhandari, Rodrigo Rabetino and Mikko Ranta

Technovation, 2024, vol. 129, issue C

Abstract: The literature on servitization and product-service systems calls for more robust evidence and theory regarding the concept of “sustainable servitization”, and how it balances sustainability, profits, and servitization. This study interprets sustainable servitization as an interaction of sustainability and servitization, investigating how servitization moderates the complex relationship between strategic emphasis on sustainability and company profitability. Using Computer-aided Text Analysis (CATA) augmented by machine learning, this study analyzes the annual reports of U.S. manufacturing companies from 1993 to 2019. The study uses objective profitability measures and longitudinal panel data. As the first contribution, the results show a negative direct relationship between manufacturing firms’ sustainability emphasis and firm profitability. As the second and primary contribution, the results demonstrate a positive moderating effect of servitization, with two inflection points, on the relationship between manufacturing firms’ sustainability emphasis and company profitability. This paper contributes to the literature by introducing the concept of sustainable servitization, discussing the interplay between sustainability emphasis and servitization and its effect on firm profitability in manufacturing firms’ transition toward sustainable business models. The present study is one of the first demonstrating the direct negative impact of sustainability emphasis on company profitability and the positive moderating role of servitization, highlighting the concept of sustainable servitization while cautioning about the sustainable servitization paradox in the context of manufacturing companies. For managers, the study demonstrates the importance of servitization in creating profits from sustainability initiatives. Value creation from sustainability strategies requires capability development from manufacturing firms.

Keywords: Sustainability emphasis and sustainable business model; Sustainable product-service systems (SPSS) and advanced services; Sustainable servitization paradox and digital servitization; Strategic emphasis; and Strategic signaling; Firm profitability and performance; Nonlinear effect and computer-aided text analysis (CATA) (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0166497223002183
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:techno:v:129:y:2024:i:c:s0166497223002183

DOI: 10.1016/j.technovation.2023.102907

Access Statistics for this article

Technovation is currently edited by Jonathan Linton

More articles in Technovation from Elsevier
Bibliographic data for series maintained by Catherine Liu ().