Services and the internationalization of manufacturing firms in Indonesia
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(Accepted version)
Date
2023
Authors
Islam, S.
Márquez-Ramos, L.
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Journal article
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SN Business & Economics, 2023; 3(2):49-1-49-18
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Saiful Islam, Laura Márquez-Ramos
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Abstract
Services have become the engine of the global economy. However, the role of services in the internationalization strategy of emerging market frms remains under researched. In a case study of Indonesia, we focus on the role played by manufacturing frms’ increasing use, production, and sale of services (or “servicifcation”) in their productivity and exports. We provide a theoretical and empirical framework to study the relationship between servicifcation, productivity, and exports at frm level. In terms of theory, we rely on the Resource-Based View of internationalization in a heterogeneous frms setting. Regarding methodology, we use panel techniques with administrative frm-level data from the automobile industry. We show that servicifcation increases the probability of emerging market manufacturing frms exporting, both directly and indirectly through increases in productivity. Results from our case study provide evidence for emerging market frms that, on the one hand, productivity mediates the relationship between servicifcation and internationalization, and on the other hand, servicifcation moderates the relationship between productivity and internationalization. Our fndings imply that creating unique resources through servicifcation allows frms to gain a competitive advantage that increases their productivity and helps them to internationalize.
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© The Author(s), under exclusive licence to Springer Nature Switzerland AG 2023. Springer Nature or its licensor (e.g. a society or other partner) holds exclusive rights to this article under a publishing agreement with the author(s) or other rightsholder(s); author self-archiving of the accepted manuscript version of this article is solely governed by the terms of such publishing agreement and applicable law.