Servitization of the manufacturing firm:exploring the operations practices and technologies that deliver advanced services

Purpose: This paper aims to explore practices and technologies successfully servitised manufacturers employ in the delivery of advanced services. Design/methodology/approach: A case study methodology is applied across four manufacturing organisations successful in servitization. Through interviews with personnel across host manufacturers, their partners, and key customers, extensive data are collected about service delivery systems. Analyses identify convergence in their practices and technologies. Findings: Six distinct technologies and practices are revealed: facilities and their location, micro-vertical integration and supplier relationships, information and communication technologies (ICTs), performance measurement and value demonstration, people deployment and their skills, and business processes and customer relationships. These are then combined in an integrative framework that illustrates how operations are configured to successfully deliver advanced services. Research limitations/implications: The analyses are reductive and rationalising. Future studies could identify other technologies and practices. Case study as a method is inherently limited in the extent to which findings can be generalised. Practical implications: Awareness and interest in servitization is growing, yet adoption of a servitization strategy requires particular organisational capabilities on the part of the manufacturer. This study identifies technologies and practices that underpin these capabilities. Originality/value: This paper contributes to the understanding of the servitization process and, in particular, the implications to broader operations of the firm. © Emerald Group Publishing Limited.

Firm growth and firm size

This article analyses the growth rates of the complete population of UK-registered firms for the period 2001 to 2005. We estimate Gibrat's law – that growth rates are independent of firm size – by deciles of the firm size distribution. Whether we are able to reject Gibrat's law varies across deciles. We also show how estimates vary according to the measure of firm size, time period and sample selection.

R&D and productivity:using UK firm-level data to inform policy

The UK's business R&D (BERD) to GDP ratio is low compared to other leading economies, and the ratio has declined over the 1990s. This paper uses data on 719 large UK firms to analyse the link between R&D and productivity during 1989-2000. The results indicate that UK returns to R&D are similar to returns in other leading economies and have been relatively stable over the 1990s. The analysis suggests that the low BERD to GDP ratio in the UK is unlikely to be due to direct financial or human capital constraints (as these imply finding relatively high rates of return). © Springer Science+Business Media, LLC 2009.

Wealth shocks, credit-supply shocks, and asset allocation:evidence from household and firm portfolios

We use a unique dataset with bank clients’ security holdings for all German banks to examine how macroeconomic shocks affect asset allocation preferences of households and non-financial firms. Our analysis focuses on two alternative mechanisms which can influence portfolio choice: wealth shocks, which are represented by the sovereign debt crisis in the Euro area, and credit-supply shocks which arise from reductions in borrowing abilities during bank distress. While households with large holdings of securities from stressed Euro area countries (Greece, Ireland, Italy, Portugal, and Spain) de-crease the degree of concentration in their security portfolio as a result of the Euro area crisis, non-financial firms with similar levels of holdings from stressed Euro area countries do not. Credit-supply shocks at the bank level result in lower concentration, for both households and non-financial corporations. Only shocks to corporate credit bear ramifications on bank clients’ portfolio concentration. Our results are robust to falsification tests, and instrumental variables estimation.

Networks, firm size and innovation

Using survey data on Australian firms this paper investigates the determinants of innovation. Various possible determinants are investigated, including market structure, export status, the use of networks, and training. Regression analysis is conducted separately for manufacturing and non-manufacturing firms and, within each sector, by firm size categories. The results include evidence of persistence in innovative activities and that the use of networks is associated with innovation in some sector-firm size categories. Specifically, small manufacturing firms exhibit a positive association between networking and innovation. In contrast, for non-manufacturing firms this association is present for medium and large sized firms.

Modelling firm innovation using panel probit estimators

Firm-level innovation is investigated using three probit panel estimators, which control for unobserved heterogeneity, and a standard probit estimator. Results indicate the standard probit model is misspecified and that inter-firm networks are important for innovation.

Firm performance and investment in R&D and intellectual property

This paper analyses the relationship between innovation - proxied by Research and Development (R&D), patent and trade mark activity – and profitability in a panel of Australian firms (1995 to 1998). Special attention is given to assessing the nature of competitive conditions faced by different firms, as the nature of competition is likely to affect the returns to innovation. The hypothesis is that lower levels of competition will imply higher returns to innovation. To allow for a time lag time before any return to innovation, the market value of the firms is used as a proxy for expected future profits. The results give some support for the main hypothesis: the market’s valuation of R&D activity is higher in industries where competition is lower. However, the paper highlights the difficulty in assessing competitive conditions and finds a number of results that challenge the simple hypothesis.

Does human capital endowment of foreign direct investment recipient countries really matter? evidence from cross-country firm level data

The stylized literature on foreign direct investment (FDI) suggests that developing countries should invest in the human capital of their labor force in order to attract FDI. However, if educational quality in developing country is uncertain such that formal education is a noisy signal of human capital, it might be rational for multinational enterprises to focus more on job-specific training than on formal education of the labor force. Using cross-country data from the textiles and garments industry, we demonstrate that training indeed has a greater impact on firm efficiency in developing countries than formal education of the workforce. © 2013 John Wiley & Sons Ltd.

Good and bad institutions:is the debate over? Cross-country firm-level evidence from the textile industry

Using firm-level data from nine developing countries, we demonstrate that certain institutions, like restrictive labour market regulations, that are considered bad for economic growth might be beneficial for production efficiency, whereas good business environment, which is considered beneficial for economic growth, might have an adverse impact on production efficiency. We argue that our results suggest that there might be significant difference in the macro- and micro-impacts of institutional quality, such that the classification of institutions into 'good' and 'bad might be premature. © The Author 2013. Published by Oxford University Press on behalf of the Cambridge Political Economy Society. All rights reserved.

Firm dynamics and job creation in the United Kingdom:1998–2013

This article is motivated by a very simple question – ‘what types of firms create the most jobs in the UK economy?’ One popular answer to this question has been High-Growth Firms (HGFs). These firms represent only a small minority – the ‘Vital 6%’ – of the UK business population yet, but have a disproportionate impact on job creation and innovation. We re-visit the discussion launched by the 2009 National Endowment for Science, Technology and the Arts (NESTA) reports, which identified the 6% figure and, using more recent data, confirm the headline conclusion for job creation: a small number of job-creating firms (mostly small firms) are responsible for a significant amount of net job creation in the United Kingdom. Adopting our alternative preferred analytical approach, which involves tracking the growth performance of cohorts of start-ups confirms this conclusion; however, we find an even smaller number of job-creating firms are responsible for a very significant proportion of job creation. We conclude by considering the question – ‘what are the implications for policy choices?’.

Estimating direct and indirect effects of foreign direct investment on firm productivity in the presence of interactions between firms

We implement a method to estimate the direct effects of foreign-ownership on foreign firms' productivity and the indirect effects (or spillovers) from the presence of foreign-owned firms on other foreign and domestic firms' productivity in a unifying framework, taking interactions between firms into account. To do so, we relax a fundamental assumption made in empirical studies examining a direct causal effect of foreign ownership on firm productivity, namely that of no interactions between firms. Based on our approach, we are able to combine direct and indirect effects of foreign ownership and calculate the total effect of foreign firms on local productivity. Our results show that all these effects vary with the level of foreign presence within a cluster, an important finding for the academic literature and policy debate on the benefits of attracting foreign owned firms.

An empirical investigation on firm-level performance of cross border mergers and acquisitions

This empirical study investigates the performance of cross border M&A. The first stage is to identify the determinants of making cross border M&A complete. One focus here is to extend the existing empirical evidence in the field of cross border M&A and exploit the likelihood of M&A from a different perspective. Given the determinants of cross border M&A completions, the second stage is to investigate the effects of cross border M&A on post-acquisition firm performance for both targets and acquirers. The thesis exploits a hitherto unused data base, which consists of those firms that are rumoured to be undertaking M&A, and then follow the deal to completion or abandonment. This approach highlights a number of limitations to the previous literature, which relies on statistical methodology to identify potential but non-existent mergers. This thesis changes some conventional understanding for M&A activity. Cross border M&A activity is underpinned by various motives such as synergy, management discipline, and acquisition of complementary resources. Traditionally, it is believed that these motives will boost the international M&A activity and improve firm performance after takeovers. However, this thesis shows that such factors based on these motives as acquirer’s profitability and liquidity and target’s intangible resource actually deter the completion of cross border M&A in the period of 2002-2011. The overall finding suggests that the cross border M&A is the efficiency-seeking activity rather than the resource-seeking activity. Furthermore, compared with firms in takeover rumours, the completion of M&A lowers firm performance. More specifically, the difficulties in transfer of competitive advantages and integration of strategic assets lead to low firm performance in terms of productivity. Besides, firms cannot realise the synergistic effect and managerial disciplinary effect once a cross border M&A is completed, which suggests a low post-acquisition profitability level.