Does regional services development enhance manufacturing firm productivity? A manufacturing servitization perspective

• Published in: International review of economics & finance 2023-07, Vol.86, p.451-466
• Main Authors: Chen, Guo, Liu, Yishuang, Gao, Qizheng, Zhang, Jianqing
• Format: Article
• Language: English
• Subjects: Foreign service factor inputs; Manufacturing productivity growth; Manufacturing servitization; Regional services development
• ISSN: 1059-0560; 1873-8036
• DOI: 10.1016/j.iref.2023.03.020

Based on the micro-firm data in China, this study investigates the impact of regional services development on manufacturing productivity from the perspective of manufacturing servitization. The results indicate that: (1) The uneven development of regional services has a 13.09% inhibitory effect on manufacturing firm productivity. (2) With the level of manufacturing servitization increases, regional services development will significantly improve manufacturing firm productivity by 19.98%. (3) This improvement effect differs significantly across service sectors and manufacturing technology categories, particularly pronounced in the financial and high-tech industries. (4) The higher the share of foreign service factor inputs used by the industry to which the firm belongs, the more the negative impact of regional services development on manufacturing firm productivity. These findings, which remain robust under two-way causality and indicator reconstruction, have important implications for the next stage of sustainable development with high-quality and effective integration of manufacturing and services in China. •Regional services development has a 13.09% inhibitory effect on manufacturing firm productivity.•As manufacturing servitization increases, regional services development improves manufacturing firm productivity by 19.98%.•This improvement effect differs significantly across service sectors and manufacturing technology categories.•The more foreign service inputs in the manufacturing, the more inhibition of domestic services development will be.