Korea achived remarkable economic development through manufacturing industry. But manufacturing companies suffer from the deteriorating revenues and profits due to the intensified competition in their core product markets. And the profit ratios of key...
Korea achived remarkable economic development through manufacturing industry. But manufacturing companies suffer from the deteriorating revenues and profits due to the intensified competition in their core product markets. And the profit ratios of key manufacturing industries in Korea, such as petrochemical, steel, and consumer electronics, are in general declining after the peak of 2004, even though there are some exceptions. By these reasons, manufacturing companies are expand their businesses into services for improving profitability and secure customer loyalty. This recent movement to offering services and solutions through product is usually calld servitization in the literature by Guangjie Ren and Mike Gregory(2007) who defined it as Servitization is a change process wherein manufacturing companies embrace service orientation and develop more and better services, with the aim to satisfy customer’s needs, achieve competitive advantages and enhance firm performance.
Nevertheless, there is no study about factors affecting servitization in manufacturing companies. And previous studies that servitization affect Corporate performance in manufacturing companies are limited only financial part.
So I study about factors affect servitization in manufacturing companies and effectiveness. I test four research hypotheses based upon the various previous study underlying in service expansion. Hypotheses are: Fierce competition in main product market positively influence servitization; Entrepreneurship positively influence servitization; Realize the importance of Service positively influence servitization; Servitization positively influence Corporate performance.
Samples used for the hypothesis tests consist of 103 Korean manufacturing companies that perform service business. The results show that fierce competition in main product market, entrepreneurship and realize the importance of Service are influence servitization. And servitization manufacturing companies that expand their businesses into services positively influence corporate performance.
Hopefully, This study would help understanding reasons of servitization in manufacturing companies so that Korean manufacturers realize continuous growth hereafter.