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

21 Pages Posted: 10 Jan 2023

See all articles by Jae Wook Jung

Jae Wook Jung

Sogang University

Hyunsoo Kim

Korea Institute for International Economic Policy

Date Written: December 30, 2022

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

Suggested Citation

Jung, Jae Wook and Kim, Hyunsoo, Servitization and Manufacturing Firms’ Performance: Korean Firm-Level Data Evidence (December 30, 2022). East Asian Economic Review Vol. 26 No. 4 (December 2022) 257-277, https://dx.doi.org/10.11644/KIEP.EAER.2022.26.4.413, Available at SSRN: https://ssrn.com/abstract=4321397

Jae Wook Jung

Sogang University ( email )

35 Baekbeom-ro
Mapo-gu
Seoul, Seoul 04107
Korea, Republic of (South Korea)

Hyunsoo Kim (Contact Author)

Korea Institute for International Economic Policy ( email )

[30147] Building C, Sejong National Research Compl
Seoul, 370
Korea, Republic of (South Korea)

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