The servitization of manufacturing industries

Servitization is the practice of manufacturing firms to enrich their offerings of material products with services. Empirical evidence shows that services offered by manufacturing firms grew over the last 10 years in almost all countries where data is available. At the sectoral level, the machinery and transport equipment industry reveal the highest levels of servitization. Servitization is driven by the wish of firms to grow beyond the limitations of traditional product markets, the search for higher margins, the need for product differentiation and protection against imitation, and the importance of close interactions with and learning from customers. However, firms which are not fully committed to servitisation often find it difficult to move into services, known as the `service paradox in manufacturing companies´. New production technologies, in particular Industrie 4.0 or the Internet of Things, are expected to provide new momentum for servitization in the future.