• Title/Summary/Keyword: Servitization of Manufacturing

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Servitization and Manufacturing Firms' Performance: Korean Firm-Level Data Evidence

  • Jae Wook Jung;Hyunsoo Kim
    • East Asian Economic Review
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    • v.26 no.4
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    • pp.257-277
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    • 2022
  • Does servitization improve manufacturing firms' performance, and in what condition? Following the seminal work of Crozet and Milet (2017), this study analyzes disaggregated firm-level data that covers 40,000 South Korean manufacturing firms surveyed by the Survey of Business Activities of Korea. We compute firm-level servitization intensity with available sales data of each firm by two-digit SIC sub-sectors. We find two novel empirical regularities: Korean servitization intensity distribution shows a very different shape from the French benchmark; Servitized firms tend to perform higher profitability and higher productivity than non-servitized firms.

A Long-Term Effect of Servitization on Firm Value (제조기업의 서비스화가 기업 가치에 미치는 영향에 관한 연구 : 장기적 영향을 중심으로)

  • Ko, U-Ri;Rhim, Ho-Sun;Shin, Ho-Jung
    • Journal of Information Technology Services
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    • v.11 no.2
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    • pp.307-317
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    • 2012
  • We investigate the long-term effect of servitization strategy on firm value. Manufacturing companies recognize servitization as their competitive strategies. While most of existing literature have focused on developing theory, presenting framework, or cases, only a few papers examine effects of servitization strategy empirically. We aims to empirically test the long-term relationship between servitization strategy and firm value. Service ratio and Tobin's q are used to measure the degree of servitization and firm performance, respectively. Data set covers 130 manufacturing companies for 12 years from 1998 to 2009.

The Benchmark Model of Servitization through Similar Company Cases (유사 기업사례를 통한 서비스화 벤치마크 모델)

  • Na, Changyup;Baek, Dong Hyun
    • Journal of Korean Society of Industrial and Systems Engineering
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    • v.41 no.2
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    • pp.32-46
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    • 2018
  • Research in the Servitization of Manufacturing has become focused more on cases than concepts over the past decade. This is because governments have emphasized some practical research with policies to support their industries. Manufacturers need differentiated strategies to gain competitiveness by servitization in the global market. They should examine how common servitization has become in the same industries and markets. They should also make sure how it works and for what purpose it is done since it is necessary to make the best decision to be able to distribute the limited resources most effectively to defeat the global competitors. South Korea has the sixth largest trade volume in the world, but Korean SMEs' marketing capabilities fall short compared to that of major global companies. This paper seeks to develop the proper model and its application for the servitization with global cases which are recommended for Korean SMEs. They need to check the urgency in servitization according to their products, industries and target markets. In addition, factors such as purposes, time and types of the servitization are examined to see how they are related each other. The most significant implication of this study is that the processes for early-stage companies in servitazation are modeled to help them make the best choices.

The influence of Servitization Decision Factors on the Performance of SMEs : Focused on the Mediating Effects of Servitization Competency (중소제조업의 서비스화 결정요인이 성과에 미치는 영향 : 서비스화 역량의 매개효과를 중심으로)

  • Suh, Jieyoun;Park, Kwangho
    • Journal of Korean Society of Industrial and Systems Engineering
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    • v.42 no.2
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    • pp.49-61
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    • 2019
  • As the technological gap amongst manufacturers decreases, the life cycle of products has shortened, and competition accelerates due to the development of technology, incumbent manufacturing companies face growth limitations. In order to overcome such business issues, manufacturing companies are increasingly interested in changes in business models and innovations, especially in the direction of providing services where they can maintain the competitive advantage of their products. In such context, this empirical study examines managerial leadership, differentiation strategies, and products and services pricing as 'servitization factors', which can be driving forces for moving into a new era of growth for Korean SMEs, focusing on the mediating effects of servitization competency. The results are as follows : First, it was confirmed that executive leadership, differentiation strategy, and information & communication technology capability have a direct effect on service sales. Second, the process competency, partnership competency, and ICT competency, which are presented as the service competence of SMEs, were found to play an important role in inducing service sales in managerial leadership, differentiation strategy, product and services pricing. It also emphasized the role of the public policy such as helping to foster SMEs as key partners in the expansion of social facilities and establishing platforms through ICT and data utilization for the convergence of manufacturing services.

A Brief Sketch on Product-Service Integration Spaces for Comparison of Product-Service Systems in Manufacturing Servitization (제조업 서비스화에 있어서의 제품-서비스 시스템 비교를 위한 제품-서비스 융합 공간에 대한 소개)

  • Kim, Ji Hoon;Yoon, Se Hwan;Kim, Young Se
    • Korea Science and Art Forum
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    • v.19
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    • pp.259-267
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    • 2015
  • Product-Service Systems (PSS) has drawn significant attention since it can effectively address diverse values of consumers by integrating products and services. PSS has been defined as a system of products, services, supporting networks and infrastructure that is designed to satisfy customer needs and to generate values. Manufacturing companies can accomplish business innovation by devising new service elements and providing PSSs starting from their products. Such new efforts are called manufacturing servitization. With analysis of the company's business contexts, diverse strategies could be set for servitization. Services could be developed so that their product functions can be supported. On the other hand, new services could be devised to drive active emotional values of their customers in a broadly related manner with their products. In this way, different servitization strategies in service space could be employed. In this paper, the product-service integration spaces for comparison of product-service systems in manufacturing servitization is briefly sketched. Various issue spaces, termed dimensions, would be used including service space, customer space, value space and business model space. Diverse PSS cases, including well-known PSSs and brand new PSSs, will be classified and compared to demonstrate the product-service integration spaces.

A Study on Strengthening Enterprise Competitiveness by Sevitization (제조업의 서비스화를 통한 기업 경쟁력 강화에 대한 연구)

  • Moon, Seung Hyeog
    • The Journal of the Convergence on Culture Technology
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    • v.6 no.4
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    • pp.15-20
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    • 2020
  • A manufacturing industry has secured its competitiveness through cost reduction, research for new products, development of manufacturing technology traditionally. However, many manufacturers are being required of innovative efforts for business sustainability by emergence of new technology and industry owing to fast technology development and convergence among technologies and industries. Continuous growth can not be expected with the way of simple manufacturing and sales under the 4th industrial revolution era. Separation of service from product is getting more vague in some specific area and a service provider is often offering its own product together. Innovation destroying manufacturing value chain with servitization can only create the new value. Basic concept of servitization, paradigm change and future prospect of manufacturing industries suffering from the 4th industrial revolution will be analyzed in this paper. Also, the strategy, application and methodology for servitization required in the convergence period will be researched.

The Impact of Servitization on Firm Value : Focused on Fortune 500 Company's Alliance Announcement (서비스화(Servitization)가 기업의 시장가치에 미치는 영향에 대한 연구 : 포춘 500대 기업의 제휴공시를 중심으로)

  • Yoo, Yeon-Sung;Rhim, Ho-Sun
    • Journal of the Korean Operations Research and Management Science Society
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    • v.36 no.4
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    • pp.63-79
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    • 2011
  • In this research, we have investigated the impact of servitization on firm value focused on Fortune 500 company's alliance announcement. The Firms are categorized to understand the impact of servitization and productization. The data includes Fortune 500 companies (2009, USA). Samples used for the hypothesis tests consist of 1,057 American companies that are opened on NYSE and NASDAQ, for the years 1990 through 2010. We test four research hypotheses based upon the various theoretical perspectives in servitization. The market is selective in reacting to alliance category; service company ${\rightarrow}$ manufacturing company, service company ${\rightarrow}$ service company. The findings show that alliance is significant between service company and manufacturing company. Also, the result shows significant relationship inter-service company's alliance. We have a significant relationship between company's alliance announcement and the market value of firms and shows significant AR in financial performance. Finally, this study presents implications for manufacturing companies that pursue service-led expansion as a strategic approach and are seeking to improve market value through alliance, partnership and cooperation. Continual effort must be placed to sustain market value of the firms.

Integration of Products and Services of Korean Firms and Innovation Policy Directions

  • Jang, Pyoung Yol
    • STI Policy Review
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    • v.3 no.2
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    • pp.111-129
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    • 2012
  • The integration of products and services is being expanded in both manufacturing and service companies such as in Apple's iPod & iTunes, Amazon's Kindle, and Hyundai Motor Company's Mozen. This phenomenon has recently accelerated due to multiple factors including market change, lessening of differences in quality of products or services, the paradigm of participation and sharing, and deindustrialization and evolution toward becoming a service economy. The objective of this paper is to investigate and analyze the status and characteristics of integration of products and services in Korean firms and to suggest policy directions promoting this integration. Towards this purpose, income statements from the Korea Listed Companies Association (KLCA) database of companies listed on the Korea Stock Exchange are analyzed regarding the servitization of manufacturing firms as well as the productization of service firms. In addition, this research investigates the Korean Innovation Survey 2011 database for the service sector and 2010 database for the manufacturing sector in order to evaluate R&D activity in each. In the manufacturing sector, the average ratio of service sales (servitization) was low at 0.208, with bias in the level and distribution of ratios associated with the manufacturing sector. 18 out of a total of 23 sectors (78%) have low servitization, showing there's a long way to go for servitization in the Korean manufacturing sector. In the service sector, the average ratio of product sales (productization) was 9.53%, which is relatively high compared to that of the manufacturing sector. However, the distribution of ratios is also biased, as with the manufacturing sector. Based on this analysis, policy directions are proposed in terms of 1) R&D, 2) concept boost, 3) R&D result spread, 4) statistics, 5) infrastructure and 6) green growth.

A Conceptual Framework and Case Study on the Servitization (서비스화(servitization) 개념적 모형(conceptual framework)과 서비스화 사례연구)

  • Yoo, Yeon-Sung;Rhim, Ho-Sun
    • Journal of Service Research and Studies
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    • v.1 no.1
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    • pp.1-27
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    • 2011
  • In this research, we study on the servitization of manufacturing firms. We review literature on the servitization based on business ecosystem and internalization with extended servitization framework. We develop and suggest a conceptual framework to understand the servitization. This conceptual framework includes four parts: service competitive strategy(Porter Michael, 1980), product-service-knowledge system(PSKS), value chain, and servitization configuration. To confirm the applicability of this model, six cases are employed.

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Product-Service Systems Design Approach : Servitization of a Small Furniture Manufacturing Company (시스템 디자인 연구 : 가구제조회사의 서비스화 실제 사례 중심으로)

  • Kim, Yong Se;Lee, Ju Hye;Lee, Hee Ju;Lee, Joon Seo
    • Korea Science and Art Forum
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    • v.20
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    • pp.159-171
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    • 2015
  • Service elements are added to the product to improve the company it its sales and innovation. The servitization process could take many different routes reflecting various properties of the manufacturing firm and its business contexts. Product-service systems (PSS) design method developed at Sungkyunkwan Universty, Service Design Institute, has been applied to a small furniture manufacturing company to demonstrate the utility of the method and to devise improvements. First, the business context of the company has been analyzed and key values have been identified. A co-creative session has been conducted to develop initial service concepts to drive those key values. The diverse positioning of those service concepts on the scale of service supporting product and service support customer is then developed to plan servitization phases. The specific service concepts are about company-customer relationship building as well as customization and personalization in this case. Initial service concepts are detailed with service blueprint so that prototyping and customer experience evaluation can be done. Business models in different servitization phases are designed. Further prototyping and customer experience evaluation has been done with business strategy improvements. In this paper, the proudct-service systems design method has been reviewed and the specific and real processes of the servitization using design will be described with discussion on the improvement of the method and the enhancement of the business.