The Role of Ambidextreous Innovation in Servitization : The Nonlinear Relationship between Servitization and Company Profitability and the Moderating Role of Ambidextreous Innovation

Prior servitization papers have demonstrated mixed results regarding the profit impact of servitization and the capabilities required to facilitate the servitization process. We tap into this issue problem by aiming to investigate the relationship between servitization and company profitability and the moderating effects of exploratory, exploitative and ambidextreous innovation. We use computer-aided text analysis (CATA) to study the annual reports of U.S. manufacturing companies from 1992 to 2019 as well as objective profitability measures and longitudinal panel data to investigate the relationships between the constructs. The study contributes to the servitization literature by demonstrating a nonlinear relationship between servitization and company profitability and positive moderating effects of exploratory innovation, exploitative innovation, and ambidextreous innovation on the servitization – company profitability relationship. The study highlights the critical role of ambidextreous innovation when seeking profits from servitization. For managers, the findings demonstrate the importance of strategic emphasis and investments, generating performance from servitization