The Performance Effect of Dynamic Capabilities in Servitizing Companies

As an increasing number of companies operates in international markets characterized by global competition, many traditional manufacturers augment their product offerings with services to gain competitive advantage. As servitization needs change throughout the company, many companies struggle on the transition from a product – to a service centric business model. The dynamic capabilities view analyses capabilities in changing environments and could therefore be an interesting theoretical lens for servitization research. Building on existing case research of dynamic capabilities in a servitization context, we analyze the impact of dynamic capabilities and especially of sensing, seizing and reconfiguration capabilities on firm performance in a servitization context. Additionally, we analyze the moderating role of environmental turbulence. The results, which are based on 206 manufacturing companies, show that dynamic capabilities are an essential factor for the performance of a firm in the context of servitization. We find a significant impact of sensing and reconfiguration on firm performance, whereas seizing has no significant impact. We fail to confirm a significant moderating impact of environmental turbulence, which indicates that dynamic capabilities are important in a servitization context indifferent of environmental turbulence. However, we find indication that reconfiguration is more important in relatively stable contexts, whereas sensing is more important in turbulent environments. We contribute to the literature on servitization and dynamic capabilities by creating evidence that dynamic capabilities have an impact on firm performance in a servitization context. This has practical implications as well: Managers in servitizing companies should assess their dynamic capabilities and should especially focus on reconfiguration in relatively stable environments and on sensing on turbulent environments.