Research On The Relationship Between Manufacturing Servitization And Financial Performance In Chinese Context

Manufacturing is the foundation of economic in China.Faced with increasing international competition,deteriorating natural environment,and coupled with the disappearance of low-cost advantages,manufacturing enterprises in China are in urgent need of transformation.Some of foreign manufacturing companies have provided service offerings as new profit center,such as Xerox,IBM,domestic manufacturing companies have adopted services,such as Weichai Power and Huawei.The implementation of servitization is regarded as one of the key dimensions in Made In China 2025 and is supported by Chinese government,but whether the service-oriented manufacturing enterprises improve the performance by servitization is a core issue in this research area.This is not only a matter of concern to the enterprises,but also the basis for the government to formulate policies.Servitization in manufacturing enterprise is a process in which the identity of the enterprise is shifting from a product manufacturer to a service provider,and is influenced by the internal resource capacity and the external legitimacy.In view of this,based on the panel data of 66 large enterprises and 121 small-medium-sized enterprises(SMEs)from 2012 to 2016 in Chinese manufacturing industry and reported data,this paper explores the impact of servitization on financial performance and takes internal organizational slack and external organizational legitimacy into the analysis framework and examines their regulatory role in the relationship between servitization and financial performance.Comparing the large enterprises with small-medium-sized enterprises,this paper tries to answer following questions: What is the current status of Chinese manufacturing enterprises with servitization? How internal organizational slack and external organizational legitimacy influence the relationship between servitization and financial performance in manufacturing enterprises? This research tries to find out the mechanism and effect of servitization on financial performance systematically,so as to provide a reasonable explanation for various current disagreements and also provide reference for the service-oriented practice of manufacturing enterprises in China and other emerging economies.The empirical results show that: in China,whether large enterprise or small and medium-sized enterprise(SME),servitization significantly negatively influences financial performance.And unabsorbed slack has U-shaped influence on the relationship between servitization and financial performance for large enterprises,while the moderating effect in SMEs is negative;absorbed slack has U-shaped effect on the relationship between servitization and financial performance for both large enterprises and SMEs.In addition,whether it is a large enterprise or SME,the moderating effect of organizational legitimacy is significantly negative,and the effect in SMEs is more significant.When the development of theory is based on studies in Western economies,the findings might have limited applicability outside this specific context.Researchs based on domestic enterprises will be more conducive to the servitization practices of domestic manufacturing enterprises.This research reveals the current situation of servitization in China,and has reference value in guiding manufacturing enterprise to perform servitization.