Uncovering Productivity Gains of Digital and Green Servitization: Implications from the Automotive Industry

Abstract

The growing industrial concern about sustainability challenges has driven vehicle and auto parts manufacturers to adopt service capabilities as a way to maintain competitiveness in compliance with environmental regulations. As a result, automakers have progressively integrated digital and green service initiatives to support operations and address environmental issues effectively. The present study examined the effect of digital and green servitization on the firm’s productivity. To test their effect quantitatively, this study used the ORBIS database to construct a multi-country sample containing 228 companies in the automotive industry. Our findings indicate that implementation of digital and green servitization is positively associated with higher productivity outcomes once the two forms of servitization coexist and operate jointly. Moreover, the results of the study underscore the importance of establishing a successional pathway of implementation priorities. Our evidence suggests that firms willing to offer green services should consider offering digital services first, as this is the only way to obtain productivity gains from green servitization.