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Does Digitalisation Promote the Servicification of Manufacturing? Firm‐Level Evidence From China

Year: 2026

Type: article

Abstract: ABSTRACT In this paper, we explore the digital transformation of Chinese firms and their impact on service integration within manufacturing activities in China. Using highly disaggregated firm‐product level data, we examine various dimensions of the servicification in manufacturing and assess how digital adoption affects these processes. Our findings indicate that the adoption of digital technologies significantly drives Chinese manufacturing firms to generate more service outputs, either by complementing traditional manufacturing activities or by increasingly substituting manufacturing products with services. Moreover, we observe that digital adoption substantially improves the productivity and profitability of these firms, further incentivising them to expand their service offerings. Using text mining and sentiment analysis, we find that only manufacturing firms with positive attitudes toward digitalisation strategy tend to increase their service outputs. These results highlight the transformative effects of digital technology on manufacturing production, shedding new light on the evolving trends of service‐led global value chain upgrading in China.

Source: World Economy

DOI: 10.1111/twec.70071

Authors: Shandre Thangavelu, Wenxiao Wang, Yan Zhang, Jingwen Zou

Institutions: Sunway University, Adelaide University, The University of Adelaide, Central University of Finance and Economics

Language: English

Topic: Digital Economy and Transformation

Subfield: Strategy and Management

Field: Business, Management and Accounting

Domain: Social Sciences

SDGs: Industry, innovation and infrastructure, Decent work and economic growth

Open Access status: hybrid

Estimated APC paid: $3,570