The Impact Of Institutional Pressures On Manufacturing Servitization And Its Performances

Many well-known manufacturing companies in the world have transitioned to servatization.For example,the service revenue and profitability of IBM,General Electric,and Rolls-Royce have increased through a servatization strategy.The servatization strategy can bring many benefits to the manufacturing firms,including customer satisfaction,differentiated competitiveness,and ecological benefits.Therefore,the servatization strategy can solve many practical problems faced by Chinese manufacturing companies,including intense market competition,low profit margins,huge consumption of resources and environmental disruption.Moreover,rising costs of labor and land have resulted in the movement of manufacturing industries from China to Southeast Asia countries.This study focuses on the driving factors and firm performances of manufacturing servatization and our findings can provide theoretical and practical guidances for the servatization of Chinese manufacturing companies.Although there are many successful examples of manufacturing companies in servatization,there are also many companies that have heavily invested in services based on servatization strategy and have not achieved corresponding returns,which ultimately leads to lower profitability and market value,that is,the phenomenon of"service paradox".This study believes that different driving factors may affect the adoption and implementation of different servatization strategies for manufacturing companies so that have impact on the firm performances.Therefore,this study is mainly to study the driving factors and performances of manufacturing servatization and to explore the interpretation of "service paradox".In the past,many studies have explored the driving factors of manufacturing companies' servatization strategies from the perspective of internal economic benefits,such as obtaining product differentiation,market competition advantages,and customer loyalty.However,this study believes that manufacturing companies will also be constrained by the external institutional environments when they pursue economic benefits.Therefore,it is inferred that the adoption of servatization strategies by enterprises will also be affected by the important factor of institutional pressures.To date,the academic society lacks attentions to the relationships between institutional pressures and servatization strategy.Then,what impact does the external institutional environments have on the adoption of strategic decision-making for enterprise servatization?At the same time,is this influence the cause of the "service paradox"?Are the company's responses to external institutional pressures consistent?Which kind of companies will respond less to external institutional pressures,and which kind of companies will respond more to external institutional pressures?What impact does the manufacturing servatization strategies have on the company's financial performances and market benefits?The present study wants to answer these questions and to solve corresponding problems.Based on institutional theory,this study proposes that institutional pressures from external stakeholders such normative pressure,mimetic pressure,and coercive pressure will positively influence the level of the manufacturing servatization.Moreover,it is found that organizational identity orientations have impact on the responses of manufacturing enterprise when they face institutional pressures.More specifically,individualistic identity orientation will weaken the positive effects of institutional pressures on the manufacturing servatization,and relational identity orientation will strengthen the positive effects of institutional pressure on the level of manufacturing servatization.At the same time,it is believed that the manufacturing servatization will negatively affect the company's financial performances and positively affect company's market benefits.To verify the assumptions proposed in this study,empirical research methods are used to conduct a questionnaire survey on 312 Chinese manufacturing companies,and statistical analyses are performed on the data obtained from the survey.The following conclusions are finally reached:all institutional pressures(normative pressure,mimetic pressure,and coercive pressure)positively influence the level of manufacturing servatization.Moreover,the individualistic identity orientation weakens the positive influence of the normative pressure and mimetic pressure on the level of manufacturing servatization,and the relational identity orientation enhances the positive influence of mimetic pressure and coercive pressure on the level of manufacturing servatization.The manufacturing servatization positively affects company's market benefits but negatively affects the company's financial performances which lead to "service paradox".At the same time,we also used a new method to explain the fact that the adoption of manufacturing servatization resulting from institutional pressures would result in poor financial performances.This study demonstrates that institutional pressures are new driving factors of manufacturing servatization from the perspective of institutional theory and invsetigates the influence of organizational identity orientations on the responses of manufacturing enterprise when they face institutional pressures.Moreover,this study examines the impact of manufacturing servatization on financial performances and market benefits and investigates the influence of forecasted manufacturing servatization resulting from institutional pressures on financial performances and market benefits.This study has explained the reasons for the emergence of the"service paradox" phenomenon and provided practical guidances for the adoption of manufacturing servatization strategy.