Blazing the trail: Technological innovation and servitization

We explore the effect of servitization on firms' technological innovation performances. Drawing on the learning capabilities theory, we conjecture that servitization can represent a crucial learning mechanism for the firms that translates into an ampler set of dynamic capabilities, including the ability to produce technological innovation. We test this hypothesis using a Poisson model controlling for time, firm and country unobserved characteristics. Our sample contains observations on 11,892 manufacturing firms that provided digital or sustainable servitization in 2020 across 38 major global economies. Our econometric analyses uncover a positive relationship between digital servitization and firms' innovative performances. Furthermore, our results reveal that firms that provide green servitization are less likely to produce technological knowledge. Finally, our evidence indicates that companies that offer digital and sustainable services are more likely to innovate. This study contributes to the literature by clarifying servitization’s critical role in shaping firms' innovation performances. These results have significant implications for managers and policymakers' ability to boost firms’ innovativeness during the transition toward a circular economy.