Effect of servitization on performance in manufacturing firms: A mediating effect model of digitalisation moderated by ESG performance

Servitization and digitalisation are current trends in high-quality sustainable development in manufacturing firms. To clarify how manufacturing companies can improve their environmental, social, and governance (ESG) performance through servitization and digitalisation, this study develops a moderated mediating effects model for analysis and further investigates corporate heterogeneity. This study uses the CSMAR and WIND databases and official website of the National Bureau of Statistics of China to obtain relevant data from 2013 to 2020. Python software was used to crawl corporate annual report data from the CNINFO Website for collation and analysis, obtaining a total of 1261 companies with 9379 sample values. The findings are as follows: (i) Servitization of manufacturing enterprises can significantly enhance their performance. (ii) The service-oriented transformation of manufacturing enterprises can significantly enhance their performance through digitalisation. In contrast to the capabilities of the practical application of digital technology, digital transformation primarily manifests itself as the capability of digital underpinning technology and the practical application of digital technology. (iii) The ESG performance of companies can positively regulate the promotion of service-oriented manufacturing enterprises towards digital transformation, as well as directly foster the development of digital transformation in the manufacturing industry. When examining the individual components of ESG performance, environmental and social performance have a positive effect on regulating the promotion of service-oriented manufacturing towards digital transformation and directly driving the digital transformation of manufacturing companies. However, the governance performance does not have a significant effect. Additionally, environmental performance can restrain the positive effect of digital transformation on performance in manufacturing companies. (iv) Manufacturing companies in the eastern part of the country are improving their performance mainly by promoting digitisation, whereas those in the central and western regions are improving their profitability mainly through servitization. This study reveals the mechanism of ESG performance and the role of servitization and digitalisation of manufacturing companies on performance and suggests new paths for the development of corporate sustainability strategies.