Digital Servitization, Product Innovation and Eco-innovation: Substitutes or Complementary Strategies?

The advent of digital servitization places new challenges for innovation management in manufacturing firms. Literature postulates both positive and negative feedback effects of product-related services on firms’ product innovation capabilities. Based on a cross-sectional data set of over 1,300 German manufacturing firms from 2022, we show that firms with more sophisticated service portfolios are significantly more likely to develop product innovations. The effect is most pronounced for digital services. Furthermore, we show that this relationship also holds, with an even stronger effect-size, for products with significantly improved environmental properties (i.e. eco-product innovations). Thus, we show that digital servitization is strongly complementary with both product innovation and eco-product innovation. Further research, however, is required to illuminate this relationship in respect to product innovation radicalness and performance, as well as potential moderating and mediating effects.