Service-oriented Structural Transformation of Manufacturing Firms: An analysis using panel data for Japanese firms

Masayuki Morikawa

Discussion papers from Research Institute of Economy, Trade and Industry (RIETI)

Abstract: This study uses Japanese firm panel data to examine trends in manufacturing firms’ shift toward service-oriented businesses—referred to as “Manufacturing X.†A distinguishing feature of this study is that it analyzes not only overall non-manufacturing businesses but also narrowly defined service businesses. We find that manufacturing firms’ share of non-manufacturing sales has been steadily increasing. If the current trend continues, the share of non-manufacturing sales among these firms is projected to reach 16.5% by 2040. Both the proportion of firms engaged in and sales share of narrowly defined services such as machine repair, professional services, and business services are rising, indicating a gradual shift in manufacturers’ service businesses. Expanding narrowly defined service sales is positively associated with sales growth and profitability.

Pages: 22 pages
Date: 2025-11
New Economics Papers: this item is included in nep-bec, nep-sbm and nep-sea
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