Does Digitalisation Promote the Servicification of Manufacturing in China?

Wenxiao Wang and Shandre Mugan Thangavelu
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Wenxiao Wang: Zhongnan University of Economics and Law, China
Shandre Mugan Thangavelu: Sunway University, Malaysia and the University of Adelaide, Australia

No DP-2024-04, Working Papers from Economic Research Institute for ASEAN and East Asia (ERIA)

Abstract: : This paper uses detailed firm-level and transactional-level trade data to examine the causal relationship between digitalisation and servicification in Chinese manufacturing firms. Using the novel approach of text mining and analysis, this paper constructs two firmlevel measurements of digitalisation and servicification. Further, it explores the impact of digitalisation on services integration within manufacturing activities. We find digitalisation plays a crucial role in enhancing manufacturing servicification, enabling firms to produce and sell more service products. We also highlight that the two mechanisms through which digitalisation promotes servicification are digital technology and profitability. This paper contributes to the existing literature by developing the micro-level evidence of the digital transformation occurring within Chinese manufacturing firms and sheds light on the emerging services-led global value chain upgrading pattern.

Keywords: digitalisation; servicification; manufacturing firms; text mining; text analysis (search for similar items in EconPapers)
JEL-codes: F14 F23 (search for similar items in EconPapers)
Date: 2024-05-07
New Economics Papers: this item is included in nep-cna, nep-cse, nep-sea and nep-tid
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