Exploring the financial consequences of the servitization of manufacturing

Commentators suggest that to survive in developed economies manufacturing firms have to move up the value chain, innovating and creating ever more sophisticated products and services, so they do not have to compete on the basis of cost. While this strategy is proving increasingly popular with policy makers and academics there is limited empirical evidence to explore the extent to which it is being adopted in practice. And if so, what the impact of this servitization of manufacturing might be. This paper seeks to fill a gap in the literature by presenting empirical evidence on the range and extent of servitization. Data are drawn from the OSIRIS database on 10,028 firms incorporated in 25 different countries. The paper presents an analysis of these data which suggests that: [i] manufacturing firms in developed economies are adopting a range of servitization strategies-12 separate approaches to servitization are identified; [ii] these 12 categories can be used to extend the traditional three options for servitization-product oriented Product-Service Systems, use oriented Product-Service Systems and result oriented Product-Service Systems, by adding two new categories "integration oriented Product-Service Systems" and "service oriented Product-Service Systems"; [iii] while the manufacturing firms that have servitized are larger than traditional manufacturing firms in terms of sales revenues, at the aggregate level they also generate lower profits as a % of sales; [iv] these findings are moderated by firm size (measured in terms of numbers of employees). In smaller firms servitization appears to pay off while in larger firms it proves more problematic; and [v] there are some hidden risks associated with servitization-the sample contains a greater proportion of bankrupt servitized firms than would be expected. © Springer Science + Business Media, LLC 2009.

Corner effect and asymmetry in transonic channel flows

An experimental and numerical investigation into transonic shock/boundary-layer interactions in rectangular ducts has been performed. Experiments have shown that flow development in the corners of transonic shock/boundary-layer interactions in confined channels can have a significant impact on the entire flowfield. As shock strength is increased from M∞ = 1:3 to 1.5, the flowfield becomes very slightly asymmetrical. The interaction of corner flows with one another is thought to be a potential cause of this asymmetry. Thus, factors that govern the size of corner interactions (such as interaction strength) and their proximity to one another (such as tunnel aspect ratio) can affect flow symmetry. The results of the computational study show reasonable agreement with experiments, although simulations with particular turbulence models predict highly asymmetrical solutions for flows that were predominantly symmetrical in experiments. These discrepancies are attributed to the tendency of numerical schemes to overprediction corner-interaction size, and this also accounts for why computational fluid dynamics predicts the onset of asymmetry at lower shock strengths than in experiments. The findings of this study highlight the importance of making informed decisions about imposing artificial constraints on symmetry and boundary conditions for internal transonic flows. Future effort into modeling corner flows accurately is required. Copyright © 2011 by the American Institute of Aeronautics and Astronautics, Inc. All rights reserved.