Can synergistic effect of servitization and product innovation improve ESG performance of manufacturers? The moderating role of digitalization

Purpose The purpose of this study is to investigate the impact of servitization, product innovation and their synergistic effect on environmental, social and governance (ESG) performance and explore the moderating role of digitalization. Design/methodology/approach This study uses an unbalanced panel-data set of 13,953 observations from 2,523 Chinese listed manufacturers to test the hypotheses. Findings The results reveal that servitization has no direct impact on ESG performance, but both product innovation and synergistic effect positively affect ESG performance. Digitalization positively moderates product innovation, as well as the synergistic effect and ESG performance. Further analysis shows that servitization has a positive impact on environmental performance but a limited impact on social and governance performance. Product innovation and the synergistic effect contribute to environmental, social and governance performance. Practical implications This study provides micro-empirical evidence for manufacturers to focus on ESG performance in their servitization and product innovation to achieve sustainable development. Also, they are encouraged to adopt more digital technologies and accelerate the synergy of servitization and product innovation. Originality/value This study extends related literature on servitization and product innovation based on the synergy theory. Also, it adds new content to the relevant studies on ESG performance based on the value co-creation of stakeholders. Finally, it contributes to digitalization-related research by revealing its strong moderating effect.