Servitization and firm performance: evidence from a specific policy in China

Purpose This study aims to investigate servitization’s impact on firm performance empirically and further explore the underlying causal mechanisms through which this effect operates and examine how heterogeneous factors and industry characteristics moderate this relationship. Design/methodology/approach This study leverages the Chinese policy of promoting servitization as a quasi-natural experiment and employs panel data from Chinese listed firms. Utilizing propensity score matching-difference-in-differences methodology, this study examines the effect of servitization on performance enhancement, conducting a series of robustness and endogeneity tests to ensure the validity of the findings. Furthermore, this study also explores mediating, heterogeneous and moderating effects. Findings Servitization positively influences firm performance through the mediating channels of enhanced innovation and productivity. This impact exhibits heterogeneity contingent upon servitization type, competitive environment and ownership structure, further moderated by industry characteristics. Originality/value This study uses a quasi-natural experiment to examine the impact of servitization on firm performance, providing context for understanding the resource-based view, dynamic capabilities and service-dominant logic. Furthermore, it systematically identifies channels and factors influencing servitization’s effect on performance enhancement and offers robust and comprehensive empirical evidence. This research also provides evidence supporting the crucial role of industrial policy in promoting industrial transformation and development.