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Examining the influence of service additions on manufacturing firms’ bankruptcy likelihood

Accepted version
Peer-reviewed

Repository DOI


Type

Article

Change log

Authors

Benedettini, O 
Swink, M 

Abstract

By evaluating secondary data from 74 bankrupt manufacturers and 199 matched non-bankrupt competitors, this study investigates the relationship of manufacturers' service offerings to their survival. While showing that the number of services offered is not significantly associated with bankruptcy likelihood, the results suggest that greater numbers of product-related and product-unrelated service offerings do reduce bankruptcy likelihood when properly complemented by firm-level contextual factors. Offering more product-related services causes bankruptcy likelihood to decrease for those companies that have a sufficiently diversified product business. In turn, companies with sufficient slack resources can expect bankruptcy likelihood to be reduced from the offering of more product-unrelated services. In contrast, companies should not expect that successful product sales performance will increase their chances of survival by focusing on product-dependent services. In light of these findings, this study challenges the notion from conceptual literature that additional services per se increase the chances of firm survival; it extends prior empirical studies in uncovering critical firm-level context effects; and it proposes portfolio theory as a theoretical foundation to examine manufacturers' service expansions.

Description

Keywords

Service strategy, Service offering, Manufacturing companies, Bankruptcy, Portfolio theory

Journal Title

Industrial Marketing Management

Conference Name

Journal ISSN

0019-8501
1873-2062

Volume Title

Publisher

Elsevier BV
Sponsorship
Royal Academy of Engineering (RAEng) (unknown)