The impact of servitization on the environmental and social performance in manufacturing firms

Purpose This study aims to examine how servitization affects the environmental and social performance of manufacturing firms. Design/methodology/approach The hypotheses are tested using fixed-effect panel models based on secondary data of 1,413 manufacturing firms publicly listed in the USA. Findings Results show that servitization is positively related to the social performance of manufacturing firms; this positive relationship is more prominent under high levels of human resource slack. However, the impact of servitization on environmental performance depends on the level of absorptive capacity and human resource slack. Servitization improves environmental performance under high levels of absorptive capacity and human resource slack, while this positive impact is insignificant under low levels of absorptive capacity and human resource slack. Research limitations/implications The study focuses on the degree (depth) of servitization but ignores the scope of services provided by manufacturing firms (breadth of servitization). Practical implications This research suggests that servitization is an effective way of achieving simultaneous improvements in environmental and social performance. However, high levels of absorptive capacity and human resource slack are needed to achieve this goal. Originality/value This study contributes to the servitization literature by demonstrating the environmental and social sustainability benefits of servitization. The findings also highlight the crucial role of absorptive capacity and human resource slack on improving environmental and social performance through servitization.