Choice versus necessity: understanding service diversification and firm performance in manufacturing

Anwar Adem; Giuliana  Battisti; Nigel  Driffield; Andreas  Schroeder

doi:10.1016/j.jbusres.2025.115949

Choice versus necessity: understanding service diversification and firm performance in manufacturing

Anwar Adem
, Giuliana Battisti
, Nigel Driffield
, Andreas Schroeder

University of Warwick
Warwick Business School
Lancaster University Management School Lancaster University Lancaster LA1 4YW UK

Research output: Contribution to journal › Article › peer-review

2 Citations (Scopus)

5 Downloads (Pure)

Abstract

This study examines the effect of service-oriented manufacturing business models on firm performance and the drivers of the performance disparities across adopters. Drawing on the resource-based view of the firm, we identify necessary conditions for diversification into services, and also for translating this into performance. Using data from 15,732 UK manufacturing companies in the period 2010–2021, we demonstrate that service offering increases the productivity, profits, and turnover of manufacturing firms. The increase intensifies with the extent of the offering and is contingent on firm specific resources related to implementing the business model innovation. The diversification strategy is more common in firms with large human capital resources, with financial difficulties, and those facing high levels of competition. It is less likely among firms with alternative options for diversification, such as internationalization.

Original language	English
Article number	115949
Number of pages	18
Journal	Journal of Business Research
Volume	206
Early online date	29 Dec 2025
DOIs	https://doi.org/10.1016/j.jbusres.2025.115949
Publication status	Published - 1 Mar 2026

Bibliographical note

Funding

This work was supported by the Economic and Social Research Council (ESRC) under grant number ES/W010194/1.

Funders	Funder number
Economic and Social Research Council	ES/W010194/1

Keywords

Productivity
Service Offering
Innovation
Firm Performance
UK

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10.1016/j.jbusres.2025.115949Licence: CC BY 4.0

Choice versus necessity - understanding service diversification and firm performance in manufacturing
Copyright © 2025 The Authors. Published by Elsevier Inc. This is an open access article under the CC BY license ( https://creativecommons.org/licenses/by/4.0/ ).
Final published version, 1.71 MBLicence: CC BY 4.0

Cite this

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abstract = "This study examines the effect of service-oriented manufacturing business models on firm performance and the drivers of the performance disparities across adopters. Drawing on the resource-based view of the firm, we identify necessary conditions for diversification into services, and also for translating this into performance. Using data from 15,732 UK manufacturing companies in the period 2010–2021, we demonstrate that service offering increases the productivity, profits, and turnover of manufacturing firms. The increase intensifies with the extent of the offering and is contingent on firm specific resources related to implementing the business model innovation. The diversification strategy is more common in firms with large human capital resources, with financial difficulties, and those facing high levels of competition. It is less likely among firms with alternative options for diversification, such as internationalization.",

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Choice versus necessity: understanding service diversification and firm performance in manufacturing

Abstract

Bibliographical note

Funding

Keywords

Access to Document

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