Revisiting the role of service for manufacturing firm exports: Evidence from Japanese firm-level data

This study revisits the impact of the servicification of Japanese manufacturing firms on their performance in the export market using a Japanese firm-level panel data set from 2009 to 2019. We constructed two measures of firm-level servicification: in-house service production and bought-in service input, which refers to service purchased from external providers. We then examine the impact of both types of servicification on corporate performance in the export market, as measured by the global value chain participation dummy and export intensity. Estimating the correlated random effects model, which allows us to control for unobserved individual fixed effects, we find that bought-in service input, especially service outsourcing, significantly improves global value chain participation and export intensity, and that this effect is greater for high-tech industries. • The effect of the servicification on firm’s oversea business expansion is examined. • Unobserved fixed effects are controlled by the Correlated Random Effect model. • Various measure of the servicification, including service outsourcing, is employed. • The service input procured from external providers have significant impact.