Servitisation of European manufacturing: evidence from a large scale database

TLDR

Manufacturing firms increasingly produce and provide services alongside or instead of their traditional physical products. The study aims to provide new evidence on the servitisation of European manufacturing and test prior case‑study findings using a large firm‑level dataset. The authors use this extensive firm‑level database to examine servitisation patterns across Europe. Service turnover remains small relative to physical product turnover; national differences are minor, while firm size shows a U‑shaped relationship to servitisation, and servitisation is positively linked to product complexity and the likelihood of product innovation.

Abstract

Manufacturing firms increasingly produce and provide services along with or instead of their traditional physical products. The goal of this paper is to provide new evidence for this servitisation of European manufacturing and test previous findings based on case studies with a large, firm-level data set. Empirical results indicate that service turnover of manufacturing firms is still small compared to the turnover with physical products. National differences play only a minor role in explaining the degree of servitisation. Firm size is of more relevance. Results reveal a U-shaped relationship between firm size and servitisation which points to advantages of both, small and large firms in servitisation. Moreover, servitisation is positively related to product complexity and the likelihood that the firm introduces product innovation.