Torben Juul Andersen & Søren Bering: Integrating distribution, sales and services in manufacturing: A comparative case study

The integration of services in manufacturing (servitization) is considered an essential value-enhancer but constitutes a paradox as servitization is difficult and often associated with lower performance. This study uses economic theory, corporate strategy, and various micro-foundational lenses to enlighten and resolve the servitization puzzle.

The study gains important insights about integration-oriented servitization efforts and uncovers the governance structures, coordination approaches, and management controls adopted by manufacturing firms that integrate downstream services effectively.  High performance puts equal emphasis on production and downstream distribution, sales and services activities and motivates individual engagement in entrepreneurial efforts to develop combined product-services offerings valued by customers.  Under performance prioritizes operating efficiency managed through planning, standardization, authority, and central controls.  So, forward integration from manufacturing into distribution, sales and services adopted as a successful servitization strategy needs structure and particular coordination approaches to be effective in complex dynamic product-markets.  As forward integration remains a common strategy among manufacturing firms that constitute the backbone of modern economies, the effective governance of these integration-oriented servitization efforts has important implications for societal value creation.
Available here.