Servitization and Manufacturing Firms’ Performance: Korean Firm-Level Data Evidence

Abstract

Does servitization improve manufacturing firms’ performance, and in what condition? Following Crozet and Milet (2017)’s seminal work, this study analyzes disaggregated firm-level data that covers 40,000 South Korean manufacturing firms surveyed by the Survey of Business Activities of Korea. We compute firm-level servitization intensity with available sales data of each firm by two-digit SIC sub-sectors. We find two novel empirical regularities: Korean servitization intensity distribution shows a very different shape from the French benchmark; Servitized firms tend to perform higher profitability and higher productivity.

Keywords: Servitization, Manufacturing, Firm Performance, Productivity

JEL Classification: L25, M20, O31