LAUSR

Abstract Although both servitization and digitalization have been shown to contribute to a manufacturer's performance, how the two strategies interact in affecting firm performance has been largely under-investigated. By adopting the service-dominant logic, this study fills this gap in the literature by examining how two types of servitization—basic and advanced—interact with two types of digitalization—internal and external—in influencing the market performance of a manufacturer. We test our hypotheses using survey responses collected from 257 manufacturers in China. Interestingly, our results indicate both positive and negative interactions between servitization and digitalization interactions. Specifically, basic (advanced) servitization positively interacts with internal (external) digitalization but negatively interacts with external (internal) digitalization in affecting manufacturer market performance. In addition, we find that basic and advanced services reinforce each other's positive effects on a manufacturer's market performance, an interaction effect that we do not find for internal and external digitalization. By bridging the servitization and digitalization literature, this study reveals intriguing findings that can help manufacturers benefit from the simultaneous adoption of servitization and digitalization through the implementation of the best portfolio.