Configurations for emerging market firms to achieve a high-level servitization strategy: evidence from Chinese manufacturing firms

Abstract

Purpose Emerging markets face the developmental circumstances of a weak foundation in both manufacturing and services. Although servitization is viewed as an opportunity to realise industry transformation and upgrading, ways for emerging market firms to implement a high-level servitization strategy is still understudied. This study examines combinations of causal conditions for emerging market firms to implement a high level of servitization. Design/methodology/approach Anchored in the strategy tripod model, this study examines the configurations for implementing a high-level servitization strategy by using fuzzy-set qualitative comparative analysis (fsQCA) and data from the China Stock Market and Accounting Research Database (CSMAR). Findings The findings identify three kinds of configurations for achieving a high-level servitization strategy: market-cultivational servitization, competition-driven servitization and government-related servitization. Furthermore, the mechanisms for implementing a high-level servitization strategy differ within the regional marketization level and state-owned equity. Specifically, the improvement of the regional marketization level helps manufacturing firms realise a high level of servitization by strengthening service capacity, and state-owned equity helps firms gain distinctive legitimacy to integrate suppliers and providers into the servitization context. Research limitations/implications The proposed multilevel perspective frameworks enable manufacturing firms in emerging markets to achieve a high level of servitization strategy. Originality/value This paper explores the impact of institutional environment, industry conditions and firm-level microfoundations on servitization, therefore providing a reference framework for emerging market firms interested in implementing high-level servitization strategies.