A Study Of Service Innovation In Modern Manufacturing Enterprises

Innovative services plus core products have become an important approach for modern manufacturing enterprises to compete for customers. Service innovation has also become a major part of modern manufacturing enterprises to implement differentiation competition strategies. Thanks to service-enhancement in the manufacturing industry, service innovation has played a more and more important role in enterprises. It has even become an indispensable part of modern manufacturing enterprises, especially under the circumstances of the centenarian global financial crisis. Modern manufacturing enterprises are using service innovations such as "Industrial Solutions Factory" to improve their operating performances, achieve sustainable development and extend enterprise life cycle.However, existing studies on service innovation mainly focus on the service industry, or the tertiary industry, with less on the manufacturing industry. There is still no systematic research that can help bring forth more service innovation in modern manufacturing enterprises.Because of this, this dissertation analyzes the basic theories of service innovation in modern manufacturing enterprises and their impacts on enterprise operating performances. It aims to provide theoretical support and practical guidance for modern manufacturing enterprises on service innovation and sustainability.The dissertation completes the research through 7 chapters. The main work done in each chapter is as follows:Chapter One is to define the research issue and to set up the research target. In this chapter the necessary and feasibility of researching the service innovation in the modern manufacturing enterprises is assessed and the issues waiting to solve in service innovation are clarified. Also this chapter points out that the research of service innovation in modern manufacturing enterprises is significant to understand the essential of service innovation and guide the service innovation practices. Then the roadmap of the research and the structure of the dissertation are defined.Chapter Two gives a clear picture of the theories and works on service, service innovation and service innovation in the manufacturing industry. It points out the direction for Chapter Three that systematically analyzes basic theories on service innovation in the modern manufacturing enterprises.Chapter Three systematically analyzes the basic theories on service innovation for the modern manufacturing industry. It first combs into the features and development history of service in the industry and the concept and connotation of innovating the services. Based on this, it puts forward the concept of service innovation in the manufacturing industry. Based on a large amount of case analysis, this chapter then generalizes and analyzes the innovations, including their main types, typical models and basic features. These analyses lay the solid foundation for Chapter Four. At last, this chapter concludes the six basic rules of service innovation in the modern manufacturing enterprises. This chapter is the basis of the dissertation.Chapter Four is to research the manufacturing servitization and the service innovation mechanism in modern manufacturing enterprises based on the theoretical analysis made in Chapter Three. This chapter starts with basic analysis into the manufacturing servitization of the industry, including its concept, development trend, causes and how to promote the process. It then approaches the topic from the perspective of competition strategies, such as why modern manufacturing enterprises choose servitization competition strategies and how to implement them. This chapter selects typical cases to fully illustrate these matters.In the end, the chapter presents a theory on the service innovation- enhancement of manufacturing enterprises based on the differentiation mechanism and production function and factor substitution mechanism. These analyses lay a theoretical foundation for following researches on service innovation and its role in improving operating performances in modern manufacturing enterprises.Chapter Five starts with an analysis into the Service Profit Chain closely related to service innovations and an interpretation to the Service Profit Chain Model. It points out that leading service strategies and leading cost strategies are the core of the "Service Profit Chain" and further concludes that the Service Profit Chain could effectively manage service innovations. Then this chapter illustrates the profits service innovation could bring to modern manufacturing enterprises in terms of the transformation of production means, enterprise financial earnings, customer value, enterprise competitiveness and strategic success. Based on the discussions in previous chapters, this chapter constructs empirical models of differentiation mechanism and factor substitution mechanism, raises hypotheses and proves them. It testifies the impacts service innovation bears on enterprise performances. From the obtained data and through the service differentiation empirical model, this chapter concludes that the input of organizational resources has significant positive impacts on improving the quality of innovated services, which in turn promotes customer performances and enterprise performances. The factor substitution empirical model demonstrates that the input of organizational resources has significant positive impacts on enterprise performances while the factor substitution variant does not play a significant role in coordinating organizational resources and enterprise performances. This chapter also presents possible reasons for the testing results as above described. Therefore, Chapter Five proves that service innovation has significant positive impacts on the enterprise operating performance through the empirical study.Chapter Six focuses on the analysis of service innovation management support system and service innovation dynamics in the modern manufacturing enterprises based on all the discussions in previous chapters. This chapter first analyzes the management support platform for the service innovations, suggests building a platform for customer services and to support service innovations, and points out the working mechanism and process of using the customer service platform to support service innovations. Then this chapter discusses the service innovation dynamics in the modern manufacturing enterprises. At last, the chapter makes an empirical study to analyze the impacts of the external environment, external behaviorist and internal factors on the motives for service innovation. Through surveys on typical enterprises, the empirical study shows that the core competence of an enterprise, its customer-oriented strategies and principles, the flat and networking organizational structure, the establishing of a dedicated service innovation R&D department and the amount of investment on it have significant positive impacts on service innovation in the modern manufacturing enterprises. On the other hand, the qualities of staff and their impetus, the attention an enterprise pays to the outside world, the external environment and the leaders'desire for innovation are only partly driving for service innovation at the current stage.Chapter Seven draws the main conclusions of this dissertation and points out what are still lacking and the direction of future researches.This dissertation draws the following main conclusions.(1). About the manufacturing servitization and its developmentThe dissertation believes that service in modern manufacturing industry has experienced three stages of development, i.e. service initialization stage, service standardization stage and service productivization stage. It points out that the service productivization requires efforts on service professionalization, service standardization and service diversification (individuation), which could help enterprises and customers achieve a win-win solution. This dissertation proves with typical cases that the core concept of manufacturing servitization in the modern manufacturing industry is to use core products to create value for customers, help customers gain added value, and improve the enterprise's own competitiveness.(2). About the service innovation effect mechanism in the modern manufacturing enterprisesThe dissertation makes a theoretical analysis on the service innovation effect mechanism in modern manufacturing enterprises. It analyzes the differentiation mechanism through the practices in China's modern manufacturing industry and the product differentiation theory in Industrial Organization. Meanwhile, based on the traditional production function model and factor substitution theory, this dissertation builds a factor substitution model upon the derived production function and discusses the most optimized input for manufacturers to win competition through differentiation services. These analyses lay a foundation for studying service innovation in modern manufacturing enterprises and its role in improving operating performances. This dissertation also deducts that service competition among Chinese manufacturers is possibly not yet mature or in a high level.(3). About the service innovation management support systemThe dissertation makes an analysis on the service innovation management support system in modern manufacturing enterprises. This dissertation suggests apply platform method to build a customer service platform to support the enterprises'service innovation. The dissertation explains how the customer service platform could support service innovation, i.e. the platform is a collection of shared human resources, organization, equipment and information needed to innovate services. Built with modularization ideas, the platform is a structure of sub-systems and related interface. Building the platform relies on the key capabilities of an enterprise in various fields, including its understanding of the market, its service techniques, service procedures, and organizing skills. Based on an understanding and segmentation of customers'requests on service, enterprises could use the platform to provide multiple and tailored services to different customers. The platform itself could also be updated with the changes in technologies and the market.(4). About the service innovation and Service Profit ChainThrough analyzing the Service Profit Chain that is closely related to service innovation, the dissertation presents an interpretation of the Service Profit Chain Model and concludes that the core contents of the chain is leading service strategies and leading cost strategies. The service chain is based on a leading service strategy and service innovation helps maintain the advantage. The profit chain is built upon a leading cost strategy, which is complementary to the service chain. The dissertation then further concludes that the Service Profit Chain could effectively manage service innovation.(5). About the role of service innovation in enhancing enterprise operating performancesThrough analyzing the service innovation effect mechanism in modern manufacturing enterprises, the dissertation builds a model on the differentiation mechanism and the factor substitution mechanism, constructs theoretical hypotheses, and proves them. It proves the impacts of service innovation on enterprise operating performances are as below.1) The dissertation builds an empirical model on service differentiation and demonstrates that the input of organizational resources has significant positive impacts on improving the quality of innovated services, which in turn promotes customer performances. As customer performances have significant positive influences on enterprise performances, the empirical study proves that service innovation has significant positive influence on enterprise performance.2) The dissertation also builds a factor substitution empirical model and demonstrates that the input of organizational resources has significant positive impacts on enterprise performances while the factor substitution variant does not play a significant role in coordinating organizational resources and enterprise performances. The phenomenon possibly reflects the reality in China's manufacturing industry at the present stage, i.e. the intensity of service factor substitution exerts indirect influences on enterprise performances through input of organizational resources rather than directly coordinates the relationship. From the fact that differentiated competition is achieved through service innovation we can conclude that service competition among domestic manufacturing enterprises is not yet mature or at a high level.(6). About the service innovation dynamics in modern manufacturing enterpriseThe dissertation explores the service innovation dynamics in modern manufacturing enterprise. Based on it, the dissertation makes an empirical study to analyze the impacts of the external environment, external behaviorist and internal factors on the motives for service innovation. Through surveys on typical enterprises, the empirical study shows that the core competence of an enterprise, its customer-oriented strategies and principles, the flat and networking organizational structure, the establishing of a dedicated service innovation R&D department and the amount of investment on it have significant positive impacts on service innovation in the modern manufacturing enterprises. On the other hand, the qualities of staff and their impetus, the attention an enterprise pays to the outside world, the external environment and the leaders'desire for innovation are only partly driving for service innovation at the current stage.The innovative works done in the research mainly include the following points:(1). This dissertation researches the modern manufacturing enterprises how to apply service innovation such as "Industrial Solutions Factory" to improve their operating performances, achieve sustainable development and extend enterprise life cycle. The existing studies on service and service innovation focused more on the service industry, or the tertiary industry. There are few studies on the manufacturing industry, especially on service innovation in the modern manufacturing enterprises. However, modern manufacturers have been laying emphasis on service innovation and incorporate it with technological innovation. They have also been using service innovation, such as the "Industrial Solutions Factory", to improve enterprise operating performances and pursue sustainable development. This dissertation focuses on modern manufacturing enterprises, which is closely related to studies on business management. The focus of this dissertation is new and has theoretical and practical significances.(2). This dissertation analyzes deeply on the differentiation mechanism through the practices in China's modern manufacturing industry and the product differentiation theory in Industrial Organization. It makes a research on the service innovation in modern manufacturing enterprises and its role in improving enterprise performances, which expands the research field of service innovation fruits.(3). This dissertation also analyzes the basic rules of service innovation. Currently, there are few studies on the topic, especially in the modern manufacturing industry. This dissertation discusses the basic rules of service innovation in modern manufacturing enterprises and generalizes six of them, which provides references for understanding and initiating service innovation.(4). This dissertation also researches the service innovation management support system. It constructs a customer service platform to support enterprise service innovation, states the categories and layers of the system, and explores the platform. These help expand the researches on service innovation.In summary, based on relevant theoretical researches on service innovation, the dissertation explores service innovation in modern manufacturing enterprises and its impacts on enterprise performances. It lays foundation for future researches.