Industrial services, product innovations, and firm profitability: A multiple-group latent growth curve analysis

Wolfgang Ulaga, Andreas Eggert, Jens Hogreve and Eva Muenkhoff
Additional contact information
Wolfgang Ulaga: GREGH - Groupement de Recherche et d'Etudes en Gestion à HEC - HEC Paris - Ecole des Hautes Etudes Commerciales - CNRS - Centre National de la Recherche Scientifique
Andreas Eggert: Marketing department - University of Paderborn
Eva Muenkhoff: Marketing department - University of Paderborn

Post-Print from HAL

Abstract: Manufacturers in many industries seek service-led growth beyond their product core. Yet research on the link between service revenue growth and firm profitability is still at an early stage. To shed further light on this complex relationship, we report the results of a longitudinal study based on panel data of 414 companies in the German mechanical engineering industry collected over a five-year period. Employing latent growth curve modeling and using multiple group analysis, the study provides empirical evidence for the causality between service infusion strategies and manufacturers' profit trajectories. The results also reveal differential effects of service categories and the moderating role of manufacturers' product innovation efforts. For companies with high product innovation activity, services supporting the product (SSPs) directly increase firm profitability, while services supporting the clients' actions (SSCs) do not display any link with long-term profitability. Conversely, for companies with low product innovation activity, SSCs have a significant, positive effect on firm profitability, while SSPs have only an indirect effect. In sum, our findings caution managers that service offerings do not automatically improve company profits. Manufacturers must carefully consider the fit between their service offerings and product innovation activities to grow bottom line results.

Keywords: Industrial services; product innovations; firm profitability; growth curve (search for similar items in EconPapers)
Date: 2011
References: Add references at CitEc
Citations: View citations in EconPapers (35)

Published in Industrial Marketing Management, 2011, 40 (5), pp.661-670. ⟨10.1016/j.indmarman.2011.05.007⟩

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

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:hal:journl:hal-00632809

DOI: 10.1016/j.indmarman.2011.05.007

Access Statistics for this paper

More papers in Post-Print from HAL
Bibliographic data for series maintained by CCSD ().