Unlocking the nexus of digitalization, servitization and financial performance

Abstract

PurposeThis research focuses on the association between digitalization, servitization, and financial performance (FP) and examines the roles of resource orchestration capability (ROC) and organizational improvisation (OI) by integrating resource orchestration theory (ROT) and dynamic capability view (DCV).Design/methodology/approachTo test the research model, covariance-based structural equation modeling (CB-SEM) is performed using data from a cross-sectional survey with 265 manufacturing firms.FindingsResults show that digitalization supports servitization and ROC mediates this relationship. Findings also reveal that ROC and servitization serially mediate the association between digitalization and FP. Moreover, findings demonstrate that servitization fosters FP, and OI strengthens this effect.Originality/valueDespite intense interest in digitalization and servitization, there is still a lack of understanding of how they are related and how they affect FP. Additionally, there are contradictions in the existing literature regarding these relationships, which may be explained by the digitalization and servitization paradoxes. To the best of our knowledge, this research is the first attempt to reveal the roles of ROC and OI in these associations. Therefore, this study contributes to literature by unearthing the mechanisms that are effective in relationships between digitalization, servitization and FP, enriches current knowledge and fulfills the gaps. Practically, this study offers a strategic roadmap and hints at success with digitalization and servitization for manufacturing firms.