A study on the measure of servitization: its state of the art, a theoretical framework and an empirical test to investigate the problem and propose solutions.

This work deals with the measure of a business strategy named servitization. Servitization was originally defined as the process of adding services to add value, without particular restrictions to the kind of services added or the businesses performing such addition (manufacturers or pure service providers). Nowadays, the attention has shifted toward the provision of capabilities, namely bundles of products and services by which customers are enabled to perform actions, the risks are shared and the revenue model is relational rather than transactional. As for the measure, it is intended as the quantification of the aspects to be considered when monitoring a strategy. For example, whether firm A is servitizing more or better (in terms of value created) than firm B are questions that a proper measure of a strategy should be able to answer. Moreover, the opposite problem has to be investigated, namely whether the act of servitizing does influence the financial performance or the structure (mirrored by appropriate variables) of firms. The results achieved show that currently the idea of what a measure of servitization should look like is still confused, rather each measure adopted serves a purpose functional to the particular study (e.g. share of employees in services to investigate the diffusion of service strategies at territorial level or the share of revenues from services to prove the benefits of shifting the competition toward service models). We argue for the necessity of an encompassing measure, possibly multidimensional so as to subsume the existing ones, and in any case capable of defining numerically what we are able to describe in words. For this reason, we 2 design a theoretical framework that holistically represents servitization by mean of a set of dimensions containing all the aspects of its provision. After that, it follows a numerical investigation on the influence of the level of service on important balance sheet dimensions. Due to reasons of data availability, the dimensions have not a one-to-one correspondence with those of the theoretical framework that has been built; anyway, the study provides important hints on what is really measurable of a service strategy. Indeed, the evidence shows that changes in variables shared among firms independently of their strategical focus (e.g. Current Assets, Working Capital, etc.) are not correlated with changes in the level of service. Moreover, also variables representing financial aspects of strategies like Operating Profits do not show a clear pattern if we try to explain them by using the level of service. This last evidence, other than prompting the necessity for more empirical studies to support it, brings us to the question of whether servitization should be measured only by variables strictly peculiar to it (like number of service under customer responsibility, property of the products, etc.). Moreover, we should look for other variables other than the level of service capable of explaining the observed variations and design a theoretical framework to understand them.