The role of salespeople in industrial servitization: How to manage diminishing profit returns from salespeople’s increasing industrial service shares

Business-to-business companies often differentiate themselves from competitors by complementing goods with services. While extant literature on servitization points to substantial benefits for companies and underscores the importance of the sales force for successful servitization, it has rarely empirically investigated the negative effects of and barriers to effective selling of servitized offerings at the salesperson level. Drawing on transaction cost theory, we propose that with rising service shares, the specificity of offers and transaction costs grow, partially offsetting the financial benefits. We derive four salesperson factors that moderate the effect of salespeople’s industrial service share on salespeople’s profit. These factors pertain to the extent to which salespeople individualize offers and effectively manage offers’ specificity (adaptiveness, customer valuation skills, experience). We test our conceptualization with data from 220 salespeople and company records. The results are robust to endogeneity and show that service share has a diminishing positive effect on salesperson profit. While salespersons’ offer individualization enforces this harmful effect, salesperson adaptiveness and customer valuation skills show beneficial moderating effects. This study provides valuable insights for researchers and managers into the role of the sales force in servitization and into salesperson factors conducive to realizing the full profit potential of servitized offerings.     

Uncovering the role of cross-border strategic alliances and expertise decision centralization in enhancing product-service innovation in MMNEs

Research is needed on effective servitization by multinational enterprises. This study examines whether Manufacturing Multinational Enterprises (MMNEs) can obtain better servitization outcomes by partnering with Knowledge Intensive Business Service (KIBS) firms and or by internationalizing their service function. In addition, the paper analyses the centralization of management decisions of human resources as an organizational mechanism to overcome coordination failure between product and service units. Our primary research data contain survey responses from 285 MMNEs collected in cooperation with an industry partner. Results show that cross-border strategic alliances and expertise decision centralization are critical to enhance product-service innovation.     

Image risks of servitization in collaborative service deliveries

Although servitization is seen as a potential process for reputable goods manufacturers to expand their business, it also involves risks to company image. External partners, such as suppliers and third parties, have played an increasing role in manufacturing firms' service business, but their image effects are poorly understood. This paper discusses the image risks of servitization in manufacturing companies, particularly when they operate collaboratively with third parties. An embedded case study was conducted in two units of a case company in the engineering industry. The results revealed that a good company image plays a key role in customers' selection of service providers, but this image is strongly influenced by third-party performance during service delivery. As a key contribution, this study suggests that third-party image risks are strategic issues that can direct and guide the servitization process at the level of strategy, operations, and company identity.     

Deconstructing B2B,co-creation and service deployment in East Asia: evidence from Taiwan and PRC manufacturers

Academia and governments have been advocating service deployment as an upgrading strategy for manufacturers for some time now. Existing research findings show that customer co-creation may be a key to service strategy success. However, prior studies have focused on relatively resource-rich and advanced Western contexts. This research examined co-creation’s role on service deployment performance and the conditions that encourage co-creation in the manufacturing business-to-business context of Taiwan and the PRC. The results indicate that co-creation fully mediates the relationship between a firm’s service deployment and customer-perceived value. Additionally, a firm’s product-service significance, capability specificity, supply chain mode and customer-perceived environmental turbulence may significantly influence co-creation.     

A study of the impact of owner's mode of entry on venture performance and management patterns

This study examines if firm performance and the associated patterns of management vary with the owner-manager's mode of entry into the firm in owner-started (OS), buyout (BO), and family firms (FF). Prior research suggests that these three types of firms differ on certain managerial characteristics but has not examined the role of the owner-manager's mode of entry in determining firm performance on the one hand and its influence on the firm's management pattern on the other.We collected data from 345 firms, employing four to 99 employees, operating in four northeastern states. Self-reported return on assets (ROA), annual sales, business strengths, competitive strategies, and management practices were compared for OS, BO, and FF firms. Performance was found to vary with owner's mode of entry. The 227 OS firms' average ROA was significantly higher than that of the 61 family firms and the 57 BO firms. Successful start-up owners may have enjoyed greater profits because they assumed greater risk compared to those who opted to buy an existing venture or took over a family firm. Annual sales were highest for FFs, second for OS firms, and the lowest for BOs. In terms of management patterns, owner-started firms rated themselves significantly higher on business strengths and tended to have higher self-ratings for competitive strategies and operations strengths than did FFs or BOs. All of these differences were significant after controlling for the age and size differences among the firms, indicating that mode of entry did directly impact performance as well as the management patterns.Examining the impact of mode of entry versus management patterns on venture performance, we found that while the OS mode of entry was associated with greater ROA, this was primarily due to the different management patterns adopted by the OSs. Looking at annual sales, the FF mode of entry was associated with higher sales, and this was independent of the types of management patterns adopted by the firms. A priori, BOs would appear to be in a better position to achieve superior performance, but this was not so in this sample.Further analysis revealed different paths to profitability for the three entry modes. For OS firms, high ROA was associated with operating in the service and retail sectors, developing a broad range of business strengths, and offering competitively priced but higher quality customized products. For OSs, ROA was also enhanced by using informal and personalized management practices. Sales performance was greatest when OSs employed trained staff for functions such as budgeting and sales. For FFs, ROA was enhanced by broad-ranging strengths, but it was hurt by price and quality competitiveness—mainly because on average, their lower prices were not supported by a competitive cost of goods. Sales performance was greatest when FFs had owner-managers with extensive industry experience, were conservative in adding workers, emphasized product customization, relied on written reports, but avoided long-range operations planning. Management patterns of BOs were not related to their ROA, but their annual sales were marginally higher when the acquiring owners had extensive industry background and employed a large workforce.Thus, this study confirms our hypotheses that performance and management patterns vary across mode of entry as does the effectiveness of strategic management patterns. Further, our findings concurred with previous studies which suggested that sales performance and profitability were likely to be influenced by different management actions. This study demonstrates that owner's mode of entry is an important explanatory variable for variations in performance as well as management patterns. Venture CEOs need to recognize that different management approaches may be needed for success depending upon whether they founded, purchased, or inherited their firms.     

Nature of the relationship between international expansion and performance: The case of emerging market firms

Internationally expanding companies would like to see how they compare with rivals in terms of the effect of internationalization on financial performance (for their sector and their firm). Virtually all such studies have focused on advanced nations. This study, on internationalization of firms based in an emerging economy (India), provides a unique research setting and sheds additional light on this relationship. It tests for the shape of the internationalization–performance curve for emerging market firms, and investigates differences between service firms and manufacturers in the threshold effect between the initial and later stages of internationalization. We find a U-shaped curve depicting the internationalization–performance relationship of Indian firms. Service sector firms tend to gain the positive benefits of internationalization sooner than manufacturing companies.     

The internationalization of soft-services: entry modes and main determinants in the Spanish hotel industry

This article addresses the internationalization of soft-services. These types of services require major local presence than other industries as production and consumption occur simultaneously. In particular, the study attempts to analyze those factors that might influence the entry mode choice and reflect the specific nature of the hotel industry, which shows an important increase of their operations overseas in recent years. Based on a sample composed of more than 1,200 entry operations in the Spanish hotel industry, our results suggest that determinant factors of entry mode choice in manufacturing firms cannot be directly transferred to the internationalization of soft-services firms. Some variables which were generally analyzed as determinant factors of control decisions in the manufacturing sector are not significant or present different results in the hotel industry. Moreover, this study enhances knowledge on internationalization based on countries other than the most developed.     

Earliness of internationalization and performance outcomes: Exploring the moderating effects of venture age and international commitment

This study examines the impact of early foreign market entry on new ventures’ performance outcomes. Venture age and international commitment are theorized as moderators to address the inconsistent findings of previous research surrounding the performance implications of early internationalization. Results from a sample of international new ventures in China found that the earliness of internationalization positively contributes to firm performance in terms of sales growth, but not innovation and profitability. The performance advantage of early internationalization becomes obsolete as young ventures become mature, especially among those with a low level of international commitment. This study highlights the importance of incorporating time-based dimensions of international venturing for a better understanding of the performance implications of early internationalization.     

Servitization and networking: large-scale survey findings on product-related services

This research paper aims at analyzing the impact of servitization on networking in manufacturing industries. Based on a cluster analysis, four types of manufacturers have been identified representing different stages of servitization. By multifactorial regressions, the impact of servitization on service networking has been investigated. Servitization is positively linked with increasing service networking activities of manufacturing companies. This finding implies that problems in realizing service networking do not prevent servitizing manufacturers from establishing inter-firm collaboration for service operations management issues. However, the results indicate that the mere existence of service networks can not guarantee success in servitizing.     

Student Perceptions of Internationalization,Multiculturalism, and Diversity in the Business School

Over the last five decades, business schools all over the world have adapted their strategies for introducing the theoretical and pedagogical consequences of globalization. Educational institutions have gone to great lengths to internationalize their curricula to stay current with the most recent trends in the globalizing economy. As this evolution takes place, the issues of multiculturalism and diversity are increasingly included in the internationalization dialogue. In this article we use qualitative focus groups to examine how U.S. business students experience the relationships among internationalization, multiculturalism, and diversity. Next, we consider the role of international business faculty in addressing this issue. We conclude by offering recommendations for successfully integrating these perspectives into a coherent curriculum.     

Marketplace,reseller, or web-store channel: The impact of return policy and cross-channel spillover from marketplace to web-store

With the advent of e-commerce, new platform sales have been created in the online retailing industry, and choosing the best platform has become a challenge for manufacturers. For instance, marketplace and web-store are two e-channels for selling goods directly to end customers. In the marketplace, manufacturers sell their products directly to online customers through e-tailers' platforms and share revenue with e-tailers. In the web-store channel, manufacturers sell their products directly to end customers through their platforms and do not need to e-tailers' platforms. However, some manufacturers and e-tailers continue with reseller channel yet. Reseller channel is another conventional channel in which manufacturers distribute their products to e-tailers, then e-tailers choose retail prices and sell them to consumers. Therefore, with these three different channels, the key question is when and under what conditions manufacturers can choose marketplace or reseller channel in addition to their web-store channels to grow their market share. In this paper, we analyze these three different e-channels and the conditions that manufacturers adopt the marketplace or reseller channel. For this purpose, we consider a model with two manufacturers and one e-tailer in which the manufacturers have their web-store channels, and they are willing to adopt another channelـ reseller or marketplace. The manufacturers offer a return policy in their web-store channels as a competitive strategy for attracting more customers. We find that offering return policy in web-store channels has no effect on the choice between the marketplace and reseller channel, but it has an impact on the amount of manufacturers' profits in each channel. Also, we demonstrate that regardless of offering return policy, as the coefficient of cross-channel effect increases, the manufacturers' profits, whether they choose reseller channel or marketplace channel, increase. But, as the coefficient of cross-channel effect increases, the e-tailer's profit increases when both manufacturers choose reseller channel, otherwise decreases. If manufacturers offer a return policy, the e-tailer's profit is highest when both manufacturers choose reseller channel, and if they do not offer a return policy, the e-tailer's profit is highest when both manufacturers choose marketplace channel.     

Investigating a revised service transition concept

This paper seeks empirical validation of a revised conceptual framework of ‘service transition’ that re-interprets the adoption of advanced services by manufacturing firms as a progressive expansion, rather than a shift or migration, of the offering. Using cluster analysis and logistic regression, three groups of firms are identified with respect to the offering of four categories of services, ranging from basic to highly advanced services. Results indicate that advanced services predominantly complement, rather than replace, basic or less advanced services, supporting the revised conceptual framework. In doing so, the paper responds to the call for empirical research that quantitatively validates the conceptual foundations of the field of servitization. Nevertheless, the clusters identified provide a reference scheme to scrutinise potential synergies between sets of services that can complement and leverage each other.     

New venture internationalization,strategic change,and performance: A follow-up study

Although many scholars, business experts, and government agencies enthusiastically advise all firms, including new and small ventures, to internationalize, such advice does not appear to be based on empirical evidence. Few researchers have empirically examined the link between new venture performance and the internationalization of new ventures. At best, the evidence suggests that there is no significant relationship.We used a sample of 62 U.S. new venture manufacturers in the computer and communications equipment industries during the late 1980s. These industries were purportedly globalizing and may have been leading other industries into increased international operations. We found that higher levels of internationalization (percentage of foreign sales to total venture sales) were associated with higher relative market share two years later. However, there was no significant direct relationship between percentage of international sales and subsequent return on investment (ROI). Perhaps international operations simply cost more than expected. Or perhaps, as MacMillan and Day (1987) found in their study of corporate ventures over a 4-year time period, increases in market share may be a prelude to higher ROI as scale benefits translate into higher profitability. However, the 2-year time period of our study may simply not be long enough for investments in higher market shares to produce improved profits.During the 2-year study period, many of the ventures changed their level of internationalization. Of the 36 ventures who were domestic (no international sales) in the prior study, 10 expanded into international markets over the 2 years. Of the 26 originally international ventures (international sales of at least 5%), half increased their percentage of international sales, nine reduced it, and four stayed the same. Whereas the average change in international sales percentage of the ventures was only 2.9 percentage points, the large standard deviation of 13.0 percentage points, and the leptokurtic distribution (9.2) reflected the dramatic changes made by some of the ventures. Using subgroup analysis we examined these changes in percentage of international sales in conjunction with changes in strategies and performance. Ventures that had increased international sales, relative to those that had not, exhibited more positive associations between the degree of strategic change and performance as measured in terms of both relative market share and ROI. Increased international sales in technology-based new ventures seems to require simultaneous strategic changes in order to positively impact venture performance.This study is a follow-up to McDougall's (1989) finding that technology-based new ventures that had sales in foreign markets had significantly different strategies than similar ventures that sold their products only domestically. The current study enriches the previous findings by adding consideration of (1) changes in degree of internationalization, (2) changes in strategy, and (3) venture performance.Although we found no performance penalty associated with increasing international sales alone, indiscriminant advice for new ventures to sell in foreign markets without other supporting strategic actions is inconsistent with our findings. Internationalization, alone, did not lead to increased profitability.Entrepreneurs of young technology-based firms who are considering internationalization should take heed of our results. Internationalization of sales does not appear to be a simple matter of applying established strategies and procedures developed for a domestic arena. Successful internationalization appears to require changes in the venture's strategy as well.     

The process of internationalization: how Swedish food retailers perceive their domestic supplier relationships

This paper focuses on how retailer–manufacturer relationships are influenced by the process of internationalization. Empirically, we study the Swedish food sector. It has previously been domestically oriented and concentrated. As Sweden joined the EU in 1995, however, a lot of entry barriers have disappeared and Swedish food retailers have been given new purchasing opportunities. We investigate how these changes have affected the retailers' relationships with their suppliers.Theoretically the paper is based on a network perspective and resource dependence theory.It develops and tests a set of hypotheses on howa retailer's relationships to its domestic suppliers will change when it gets a greater access to foreign products and suppliers, using a survey of 621 Swedish food retailers. Among other things, the study reveals that while being prepared to buy fewer products from Swedish manufacturers, the retailers still consider it very important to co-operate on a long-term basis with domestic suppliers.     

Choice of Market Entry Mode in Emerging Markets

Summary

This study explores the antecedents of market entry strategy in emerging markets and examines the market environmental, transaction-specific, competitive strategic factors and organizational capability that influence the choice of market entry mode. Empirical results based on a survey of Japanese companies support the combined relevance of their factors on choice of market entry mode in an emerging market. Although most of the mode of entry research assumes that the firm has the option to choose any entry mode in a given market, this study examines the impact of the factors in the internationalization process of firms. The results suggest that experiential knowledge has an immense impact on the choice of entry mode in China, an emerging market with high environmental uncertainty, but also high market potential. The empirical findings also show the important influences of risk-absorption capability and risk-dispersion mechanism on the choice of entry mode into the Chinese market.     

Turning point: when born globals enter post-entry stage

The literature on firms’ early internationalization includes a huge number of studies investigating the entry stage of companies, while works on the post-entry growth and survival have recently been increasing. In this context, this study aims to better explain which factors determine the evolution of born globals (BGs) during their lifecycles. The authors analyze the growth processes of six Italian manufacturing BGs at different stages of their development, with a particular focus on the transition of the venture from entry to the post-entry stage. The findings show that the entrepreneurial capabilities of the founders have a crucial role during the first international expansion of the companies. As BGs enter the post-entry phase, a trade-off emerges between entrepreneurial capabilities and some specific firm resources aimed at achieving the sustainable growth of the company. Moreover, the authors identify the existence of a turning point when companies switch from the entry to the post-entry stage. During this phase, entrepreneurs manage a process to transform their individual capabilities into an organizational knowledge base. Future research areas and managerial implications are discussed.     

Retailers׳ expansion mode choice in foreign markets: Antecedents for expansion mode choice in the light of internationalization theories

Whenever a retail company expands its store network in a foreign market, decisions have to be made about how this can be achieved. Existing studies of retail internationalization have usually analyzed the “entry mode” choice as an end in itself, and not as the start of a firm׳s international development. In addition, there is much debate in the academic literature about the antecedents for retail foreign operation mode choice and the relevance of generic internationalization theories to international retailing. Therefore, the objectives of this research are (1) to investigate the paths of entry and subsequent expansion modes pursued by retailers in international markets and (2) to develop and test a model of expansion mode antecedents in the light of generic business internationalization theories. This is achieved on the basis of data collected from 43 French fashion retailers and a PLS-SEM approach. Results show that (1) retailers clearly differentiate between entry and expansion modes; (2) the international marketing plan, the perceived attractiveness of the foreign market, and strategic and ownership conditions are the key antecedents for the choice of an expansion mode. After comparing the results with the explanations proposed by the generic internationalization theories, a multi-theoretical framework is proposed which draws from the Uppsala internationalization process model, network theory and the born-global theory. The findings provide a wealth of information for retailers׳ use in choosing appropriate foreign operation modes.     

Cost-efficient co-creation of knowledge intensive business services

The most significant difference between industrialization-driven product marketing and digitalization-driven service marketing can be seen in the definition of value creation, and the exchange (integration) of resources. Industrialization created efficiency in scale, whereas digitalization requires customer-oriented business models and value co-creational service processes. This research follows the value co-creational and system integrational views of service-dominant logic. We have explored how relative profitability can be increased through efficient service productization. Our approach is twofold, we have explored the commercialization of co-created services (the servitization of product-service systems) and the enhancement of service production by service processes. We have created service management framework for modular service delivery where company resources be linked to cost-efficient co-creation services.     

Influence of CEO characteristics in family firms internationalization

This research uses a survey dataset of 187 Spanish family firms to study the characteristics that may influence family firms in their decision of internationalize their activity. Based on individual and demographic variables, the study concludes that the CEO academic level of achievement influences the level of success in international expansion. In addition, the capacity for generating resources of the family firm provokes a lower resistance from family members to export. Moreover, we confirm that industry characteristics do matter in internationalization processes, noting that the specific market, product/service and technology characteristics influence the family firm internationalization. Contrary to expectations, the gender variable and the percentage of family members sitting on the board do not significantly predict the propensity to export.Our findings suggest family firm leaders seeking greater levels of firm internationalization to seriously consider the qualification level of their CEO. These insights can be useful for regulators who have to develop programs for supporting sales internationalization, as well as owners and managers of family firms, who need to understand the CEO abilities that may improve their capacity to internationalize their business.     

Internationalization and Performance of Retail Firms: A Bayesian Dynamic Model

This paper offers a fresh approach to the literature examining the effect of internationalization on retail-firm performance. We draw on the organizational learning theory to test the moderating effect of four variables which are hypothesized to affect the performance of internationalizing retailers through facilitating the transfer of learning in international markets. The study innovates by introducing a new performance metric, and an advanced methodology to account for the dynamic aspects of organizational learning. Testing our hypotheses on a sample of international retailers, we find that the relationship between internationalization and performance is U-shaped, and moderated by mergers and acquisitions, age at entry to international markets and country of origin. The findings extend prior research by providing more comprehensive evidence regarding the conditions under which internationalization leads to improved performance. The authors conclude by outlining the implications for practice.