Manufacturing Enterprise Service Oriented Strategy Research: Strategy Formulation And Implementation Perspective

In recent years, service economy has developed rapidly worldwide, demonstrating that the contribution of services to GDP and the population employed in service industries have gone up dramatically. Furthermore, more and more traditional manufacturers have started to attach more importance to services and offer more value-added services to customers to differentiate themselves from competitors, thereby gaining competitive advantage. Many world-renowned manufacturers have successfully transformed themselves into service providers. For them, revenues and profits derived from services have become very important sources of revenue and profit, and above all services have become an integral tool for competition, blurring the boundary between manufacturers and service firms. China, as a traditional country with an advantage of manufacturing, the "manufacturing factory" title is awarded at the cost of enormous resources consumption and on the basis of cheap labor force, and not to mention the fact that its service economy still lags behind many countries. Facing the pressure of worsening economic situation worldwide, the manufacturers in China, have been located in the middle of the value chain with the characteristics of low added value, have to move up and down towards the two ends of the value chain with the characteristics of high added value. Therefore, questions related to pursuing a service oriented strategy for the manufacturers in China are especially salient, and have to be answered immediately.Against this background, anchored on a service orientation strategy for manufacturers, the dissertation proposes a two-stage conceptual model which incorporates a strategy formulation perspective and a strategy implementation perspective on the basis of reviewing a large amount of previous research and interviews with executives in several firms. From a service orientation strategy formulation perspective, manufacturers have to take the industry environment external to them and organizational characteristics internal to them in consideration before formulating a service orientation strategy. Drawing on the SCP paradigm, the dissertation proposes three external environmental factors, including competitive intensity, environmental dynamics, and innovativeness in the industry; drawing on RBV, the dissertation proposes four internal characteristics, including brand equity, relational equity, customer orientation, and entrepreneurial orientation. Brand equity and relational equity fall into the category of static resources and customer orientation and entrepreneurial orientation fall into the category of dynamic capabilities. The research issue can answer two basic theoretical questions:"what kind of manufacturers should adopt a service orientation strategy and why is there considerable variability in the extent to which manufacturers adopt a service orientation business strategy?"Form a service orientation implementation perspective, this dissertation brings the concept of organizational configuration in, which is defined as a synergistic coalition of organizational structure, process, and relationship, to empirically verify the cause of the fact that manufacturers reap different levels of strategic benefits from implementing a service orientation business strategy, providing an alternative explanation to the phenomenon of "service paradox"Using a sample comprising of225manufacturers located in China, the study empirically verifies the above-mentioned two-stage conceptual model. The results indicate that competitive intensity and environmental dynamics have positive effects on the extent to which the manufacturer adopts a service orientation strategy from a perspective of strategy formulation. In terms of resources and capabilities, brand equity, relational equity, and entrepreneurial orientation are positively associated with the extent to which the manufacturer adopts a service orientation. Form a strategy implementation perspective, only organizational structure and service process moderate the relationship between service orientation strategy and firm performance, while service outsourcing doesn’t have the moderate effect between them. Specifically, compared with those manufacturers which do not set up a separate service department fully responsible for all the service businesses, those which do set up a separated service department can reap more strategic benefits from implementing a service orientation strategy. Moreover, customer-oriented and suitable service process can heighten the positive relationship between service orientation and firm performance.Theoretical contributions to the extant literature are fourfold. First, the dissertation has empirically substantiated the positive and direct effect of service orientation strategy on firm performance in the context of manufacturers in China. Second, effectively implementing a service orientation strategy depends on the manufacturer’s organizational configuration, providing an alternative explanation for "service paradox". Third, drawing on the two competing theories (the SCP paradigm and RBV) to integrate the antecedents to a service orientation strategy in the extant literature, providing basic theoretical frameworks to explain and support the formulation of a service orientation strategy. Four, this study is the first to identify brand equity, relational equity, and entrepreneurial orientation as the antecedents to a service orientation strategy and they are also empirically verified that all of them have positive impacts on service orientation strategy.With regard to the managerial implications of the conclusions, first, manufacturers should evaluate the competitive environment in which they operate, including competitive intensity and environmental dynamics when formulating a service orientation strategy; second, manufacturers should also evaluate their resources and capabilities, including brand equity, relational equity, and entrepreneurial orientation and devote themselves to accumulating more the above-mentioned resources and capabilities when formulating a service orientation strategy; last, in the process of implementing a service orientation strategy, manufacturers should adjust their organizational configuration to fit its corresponding service orientation strategy to maximize the strategic benefits to the fullest. Specifically, manufacturers should moderately empower its service employees and set up a separate service department. Moreover, the service process design must be customer-oriented and customers should be encouraged to participate in the process of design in order to establish a sound service process system.