Servitization and organizational resilience of manufacturing firms: Evidence from the COVID-19 outbreak

ABSTRACT

This study examines how service-oriented business model diversification of manufacturing firms (i.e., servitization) has affected their organizational resilience during the COVID-19 outbreak. We investigate the impact of various types of servitization (i.e., product-oriented vs. customer-oriented services) on organizational resilience. Using secondary data collected from 1914 manufacturing firms that are listed in the US stock markets, we find that servitization is inversely related to organizational resilience during the COVID-19 disruption;that is, manufacturing firms with more revenue from service businesses endure more significant stock price loss and take longer to bounce back from the loss caused by the COVID-19 disruption. The impact is more pronounced for manufacturing firms providing product-related services (than customer-oriented services). This study extends the understanding of the dark side of servitization relating to organizational resilience during a major disruption.