Research Article
The Effect of Manufacturing Firms' Strategy and Organizational Structure on Servitization
1 Korea University
Published: January 2017 · Vol. 46, No. 3 · pp. 755-779
DOI: https://doi.org/10.17287/kmr.2017.46.3.755
Full Text
Abstract
Servitization has recently become a popular phenomenon in the manufacturing industry. Although extant servitization studies suggest that a firm’s competitive strategy and organizational structure fit into its service practice, they overlook the fact that the pre-existing strategy or organizational structure cannot be modified without difficulty and may not be supportive of servitization. In the present study, we conduct confirmative factor analyses and identify two factors of generic strategy (cost leadership and differentiation) and four factors of organization structure (specialization, formalization, autonomy, and innovativeness). A set of hierarchical regression models are proposed to test the main effects and moderating effects of pre-existing strategies and organizational structure on servitization. The analytical results show that manufacturing firms’ cost-leadership strategy has a negative effect on servitization while their differentiation strategy has a positive effect. Moreover, organizational structure (specialization and formalization in particular) moderates significantly the direct effects of competitive strategy on servitization, indicating that it is critical for a firm to evaluate the dynamics between its strategy and organizational structure for a successful implementation of servitization.
