Unlocking the relationship between depth and breadth of servitization and product innovation: the moderating effects of digitalization and market competition

Purpose The purpose of this study is to explore the impact of the depth and breadth of servitization on product innovation, as well as the moderating effects of digitalization and market competition. Design/methodology/approach This study conducts an empirical analysis based on an unbalanced panel data set with 2,830 listed Chinese manufacturers consisting of 19,470 observations from 2013 to 2022. Findings The results show that both the depth and breadth of servitization can boost product innovation. Digitalization positively moderates the above relationships. Market competition has a positive moderating effect on the depth of servitization and product innovation, but not on breadth of servitization and product innovation. Practical implications This study provides micro-empirical evidence for manufacturers to strategically enhance both the depth and breadth of servitization to promote product innovation. At the same time, they need to leverage digital technologies to strengthen the innovation benefits of servitization and carefully manage the role of market competition by prioritizing depth of servitization over excessive diversification. Originality/value This study differentiates between the depth and breadth of servitization, providing a more nuanced understanding of their distinct impacts on product innovation. Also, it enriches the related literature by highlighting that the mechanisms of service-driven innovation are contingent on both digital capabilities and the intensity of market competition.