26th International Association for Management of Technology Conference - IAMOT 2017

Servitization is a business model that started in the 1980s and has quickly been used in corporate strategy, peaking with the advent of the Internet of Things (IoT). By the way, there is a crossover with information and communication technologies which treat them as a synonymy (Baines et al., 2016). Manufacturers have been shifting their focus in order to offer services jointly with their products as a way to create value to the customers (Neely, 2014; Baines e Lightfoot, 2013). Recent studies (Datta e Rajkumar, 2010; Benedettini et al., 2015; Kohtamaki et al., 2015) point that the servitization leads to a potential decline in economic performance, called “servitization paradox”. Therefore, Neely (2009) shows that servitization has a positive effect on the profit margin of the companies. Similarly, Canton (1984) highlights a positive revenue correlation between products and services. This positive feedback is significantly strengthened by more sophisticated service offerings, in which closer connections between the supplier and the customer present opportunities to identify new businesses. This paper aims to analyze the financial performance impact of servitization in Brazilian capital goods companies. A survey was conducted with 50 companies associated with the Brazilian Machinery Builders´ Association (ABIMAQ). The data collected from each company were P&L and Net Income of 2013. Besides, Cost of Goods Sold, Net Revenue and Profit Margin completed the analysis. The companies’ performance was compared according to their Profit Margin, Net Revenue and Cost of Goods Sold. A manual tabulation of the services offered by the companies was conducted, which was based on the 12 pragmatic types of service highlighted by Neely (2009). A classification was utilized to calculate the extension of servitization. The number of different services supplied by the companies was measured from 0 to 12 with weight 1. The data were processed by SPSS and Excel. Linear regression was used following the same method conducted by Neely (2009) in order to get the same comparison basis. The study reveals that the companies which have more services offerings raise more Net Revenue and increase Cost of Goods Sold. However, it is not possible to assume that the extention of servitization can increase Profit. The paper also contributes to identify the servitization stage of the publicly held Brazilian capital goods companies’. Thereby, it is possible to plan actions out at each stage to reach a better financial result. Data accessible to the public are granted only by publicly traded companies. For that reason, other types of companies were not included, which in turn reduced the sample, causing a limitation in the study. In spite of this limitation, the results open discussion about the implementation strategy to be adopted by the companies with regard to the extension of servitization. It is important to obtain a deep understanding through studies of multiple cases about the process of extension of the servitization and the stages the companies are in to create some managerial implications, especially regarding the maximization of profitability.