Service providers and firm performance: investigating the non-linear effect of dependence

PurposeServitized manufacturers can leverage close relationships with external providers of product-related services to mobilize value creation and improve the responsiveness of their offerings to customer needs. The purpose of this paper is to investigate the economic link between the relational embeddedness of external service providers, as arising from the key dimension of dependence, and firm performance.Design/methodology/approachThe study evaluates financial statement data pertaining to 190 dyadic relationships of servitized manufacturers with service providers operating in downstream channels and accounting for more than 10 per cent of their revenue.FindingsThe results indicate that service providers’ dependence has an inverted U-shaped relationship with manufacturers’ return-on-assets (ROA), via non-linear effects on return-on-sales and asset turnover. The results therefore suggest that the observed U-shaped relationship for ROA is driven by diminishing returns of dependence in terms of both differentiation ability and operational efficiency.Research limitations/implicationsFuture research could examine other dimensions of embeddedness, as well as contingency factors that may influence the embeddedness–performance relationship.Practical implicationsThe study conclusions suggest that managers of servitized firms should foster the embeddedness of external service providers, but they should also be careful to maintain an adequate level of dependence to maximize benefits and minimize liabilities.Originality/valueThe study adds to the limited research delving into inter-firm relationships between servitized manufacturers and external service providers. It empirically demonstrates the economic effects of service providers’ dependence-based embeddedness, challenging the general assumption about a monotonic positive effect of relational embeddedness.</jats:sec

Examining the influence of service additions on manufacturing firms’ bankruptcy likelihood

By evaluating secondary data from 74 bankrupt manufacturers and 199 matched non-bankrupt competitors, this study investigates the relationship of manufacturers' service offerings to their survival. While showing that the number of services offered is not significantly associated with bankruptcy likelihood, the results suggest that greater numbers of product-related and product-unrelated service offerings do reduce bankruptcy likelihood when properly complemented by firm-level contextual factors. Offering more product-related services causes bankruptcy likelihood to decrease for those companies that have a sufficiently diversified product business. In turn, companies with sufficient slack resources can expect bankruptcy likelihood to be reduced from the offering of more product-unrelated services. In contrast, companies should not expect that successful product sales performance will increase their chances of survival by focusing on product-dependent services. In light of these findings, this study challenges the notion from conceptual literature that additional services per se increase the chances of firm survival; it extends prior empirical studies in uncovering critical firm-level context effects; and it proposes portfolio theory as a theoretical foundation to examine manufacturers' service expansions.This is the author accepted manuscript. It is currently under an indefinite embargo pending publication by Elsevier

The servitization of manufacturing:a review of literature and reflection on future challenges

Purpose – The purpose of this paper is to report the state-of-the-art of servitization by presenting a clinical review of literature currently available on the topic. The paper aims to define the servitization concept, report on its origin, features and drivers and give examples of its adoption along with future research challenges. Design/methodology/approach – In determining the scope of this study, the focus is on articles that are central and relevant to servitization within a wider manufacturing context. The methodology consists of identifying relevant publication databases, searching these using a wide range of key words and phrases associated with servitization, and then fully reviewing each article in turn. The key findings and their implications for research are all described. Findings – Servitization is the innovation of an organisation's capabilities and processes to shift from selling products to selling integrated products and services that deliver value in use. There are a diverse range of servitization examples in the literature. These tend to emphasize the potential to maintain revenue streams and improve profitability. Practical implications – Servitization does not represent a panacea for manufactures. However, it is a concept of significant potential value, providing routes for companies to move up the value chain and exploit higher value business activities. There is little work to date that can be used to help practitioners. Originality/value – This paper provides a useful review of servitization and a platform on which to base more in-depth research into the broader topic of service-led competitive strategy by drawing on the work from other related research communities

Why do servitized firms fail? A risk-based explanation

Purpose – In an effort to further explain why manufacturing firms that move towards service provision often do not achieve the financial benefits they would expect, the purpose of this paper is to examine the impact of service additions on the risks affecting the firm. Design/methodology/approach – Using data drawn from a sample 129 bankrupt manufacturers (75 servitized and 54 non-servitized) and a categorization framework of failure risks, the study explores the impact of the presence of a service business on environmental and internal bankruptcy risks that a manufacturing firm must face. Findings – The study finds that the presence of a service business leads to a greater number of bankruptcy risks for the supplying firm. This is essentially because of greater internal risks. In addition, two types of service offerings are identified – demand chain and product support services. When firms offer demand chain services, they are also exposed to greater environmental risks. Research limitations/implications – The study provides empirical evidence on the relationship between servitization and bankruptcy risks, and on how this is influenced by the type of service offering. The research should be extended by a more comprehensive assessment of organizational risks in order to further validate and develop the conclusions. Practical implications – The study suggests that, as adding services introduces new risks for firms, managers have to seek means of mitigating these risks to ensure successful introduction of services. Originality/value – The paper addressed the gap in the literature for structured analyses of the risk consequences of service strategies. This is the author accepted manuscript. The final version is available from Emerald via http://dx.doi.org/10.1108/IJOPM-02-2014-005

The CHESS survey of the L1157-B1 shock: the dissociative jet shock as revealed by Herschel--PACS

Outflows generated by protostars heavily affect the kinematics and chemistry of the hosting molecular cloud through strong shocks that enhance the abundance of some molecules. L1157 is the prototype of chemically active outflows, and a strong shock, called B1, is taking place in its blue lobe between the precessing jet and the hosting cloud. We present the Herschel-PACS 55--210 micron spectra of the L1157-B1 shock, showing emission lines from CO, H2O, OH, and [OI]. The spatial resolution of the PACS spectrometer allows us to map the warm gas traced by far-infrared (FIR) lines with unprecedented detail. The rotational diagram of the high-Jup CO lines indicates high-excitation conditions (Tex ~ 210 +/- 10 K). We used a radiative transfer code to model the hot CO gas emission observed with PACS and in the CO (13-12) and (10-9) lines measured by Herschel-HIFI. We derive 20010^5 cm-3. The CO emission comes from a region of about 7 arcsec located at the rear of the bow shock where the [OI] and OH emission also originate. Comparison with shock models shows that the bright [OI] and OH emissions trace a dissociative J-type shock, which is also supported by a previous detection of [FeII] at the same position. The inferred mass-flux is consistent with the "reverse" shock where the jet is impacting on the L1157-B1 bow shock. The same shock may contribute significantly to the high-Jup CO emission.Comment: 7 pages, 9 figures, accepted for publication in Astronomy and Astrophysic

State-of-the-art in integrated vehicle health management

Integrated vehicle health management (IVHM) is a collection of data relevant to the present and future performance of a vehicle system and its transformation into information can be used to support operational decisions. This design and operation concept embraces an integration of sensors, communication technologies, and artificial intelligence to provide vehicle-wide abilities to diagnose problems and recommend solutions. This article aims to report the state-of-the-art of IVHM research by presenting a systematic review of the literature. The literature from different sources is collated and analysed, and the major emerging themes are presented. On this basis, the article describes the IVHM concept and its evolution, discusses configurations and existing applications along with main drivers, potential benefits and barriers to adoption, summarizes design guidelines and available methods, and identifies future research challenges

Herschel observations of the Herbig-Haro objects HH52-54

We are aiming at the observational estimation of the relative contribution to the cooling by CO and H2O, as this provides decisive information for the understanding of the oxygen chemistry behind interstellar shock waves. Methods. The high sensitivity of HIFI, in combination with its high spectral resolution capability, allows us to trace the H2O outflow wings at unprecedented signal-to-noise. From the observation of spectrally resolved H2O and CO lines in the HH52-54 system, both from space and from ground, we arrive at the spatial and velocity distribution of the molecular outflow gas. Solving the statistical equilibrium and non-LTE radiative transfer equations provides us with estimates of the physical parameters of this gas, including the cooling rate ratios of the species. The radiative transfer is based on an ALI code, where we use the fact that variable shock strengths, distributed along the front, are naturally implied by a curved surface. Based on observations of CO and H2O spectral lines, we conclude that the emission is confined to the HH54 region. The quantitative analysis of our observations favours a ratio of the CO-to-H2O-cooling-rate >> 1. From the best-fit model to the CO emission, we arrive at an H2O abundance close to 1e-5. The line profiles exhibit two components, one of which is triangular and another, which is a superposed, additional feature. This additional feature likely originates from a region smaller than the beam where the ortho-water abundance is smaller than in the quiescent gas. Comparison with recent shock models indicate that a planar shock can not easily explain the observed line strengths and triangular line profiles.We conclude that the geometry can play an important role. Although abundances support a scenario where J-type shocks are present, higher cooling rate ratios than predicted by these type of shocks are derived.Comment: Accepted for publication in A&

The adoption of servitization strategies by UK-based manufacturers

Almost all manufacturers offer services, but some use these as the basis for their competitive strategy. This is a growing area of interest among practitioners, policy makers, and academics, yet little is known about the adoption of servitization by UK manufacturers. In this paper a survey is presented that has been used to explore the extent, motivations, challenges, and successes of servitization within the business-to-business sector. The findings indicate, for example, that many manufacturers are succeeding with their service strategies, that they are attracted to these as a source of customer focus and revenue growth, and that such strategies require less organizational change than might be expected. Although the findings from the survey should be treated as preliminary, and further work is needed to confirm their reliability and insight, they indicate that servitization is proving to be a powerful competitive weapon for many companies

Water destruction by X-rays in young stellar objects

We study the H2O chemistry in star-forming environments under the influence of a central X-ray source and a central far ultraviolet (FUV) radiation field. The gas-phase water chemistry is modeled as a function of time, hydrogen density and X-ray flux. To cover a wide range of physical environments, densities between n_H = 10^4-10^9 cm^-3 and temperatures between T = 10-1000 K are studied. Three different regimes are found: For T < 100 K, the water abundance is of order 10^-7-10^-6 and can be somewhat enhanced or reduced due to X-rays, depending on time and density. For 100 K < T < 250 K, H2O is reduced from initial x(H2O) ~ 10^-4 following ice evaporation to x(H2O) ~ 10^-6 for F_X > 10^-3 ergs s-1 cm^-2 (t = 10^4 yrs) and for F_X > 10^-4 ergs s^-1 cm^-2 (t = 10^5 yrs). At higher temperatures (T > 250 K) and hydrogen densities, water can persist with x(H2O) ~ 10^-4 even for high X-ray fluxes. The X-ray and FUV models are applied to envelopes around low-mass Class 0 and I young stellar objects (YSOs). Water is destroyed in both Class 0 and I envelopes on relatively short timescales (t ~ 5000 yrs) for realistic X-ray fluxes, although the effect is less prominent in Class 0 envelopes due to the higher X-ray absorbing densities there. FUV photons from the central source are not effective in destroying water. The average water abundance in Class I sources for L_X > 10^27 ergs s^-1 is predicted to be x(H2O) < 10^-6.Comment: 12 pages, 14 figures, Accepted for publication in A&

H2O line mapping at high spatial and spectral resolution - Herschel observations of the VLA1623 outflow

Apart from being an important coolant, H2O is known to be a tracer of high-velocity molecular gas. Recent models predict relatively high abundances behind interstellar shockwaves. The dynamical and physical conditions of the H2O emitting gas, however, are not fully understood yet. We aim to determine the abundance and distribution of H2O, its kinematics and the physical conditions of the gas responsible for the H2O emission. The observed line profile shapes help us understand the dynamics in molecular outflows. We mapped the VLA1623 outflow, in the ground-state transitions of o-H2O, with the HIFI and PACS instruments. We also present observations of higher energy transitions of o-H2O and p-H2O obtained with HIFI and PACS towards selected outflow positions. From comparison with non-LTE radiative transfer calculations, we estimate the physical parameters of the water emitting regions. The observed water emission line profiles vary over the mapped area. Spectral features and components, tracing gas in different excitation conditions, allow us to constrain the density and temperature of the gas. The H2O emission originates in a region where temperatures are comparable to that of the warm H2 gas (T\gtrsim200K). Thus, the H2O emission traces a gas component significantly warmer than the gas responsible for the low-J CO emission. The H2O column densities at the CO peak positions are low, i.e. N(H2O) \simeq (0.03-10)x10e14 cm-2. The H2O abundance with respect to H2 in the extended outflow is estimated at X(H2O)<1x10e-6, significantly lower than what would be expected from most recent shock models. The H2O emission traces a gas component moving at relatively high velocity compared to the low-J CO emitting gas. However, other dynamical quantities such as the momentum rate, energy and mechanical luminosity are estimated to be the same, independent of the molecular tracer used, CO or H2O.Comment: 14 pages, 13 figures, 4 table