Abstract
Digitalization and servitization are two crucial transition pathways for manufacturing firms, with their relationship explored by some existing studies. However, there is limited research on the mechanism of their interaction's effect on the firm financial performance. To address the gap, this paper draws on service-dominant logic, resource-based view and dynamic capabilities theory to establish a theoretical model. A sample of 567 Chinese manufacturing firms is selected, and a mediated moderation model is used to explore this mechanism. The findings indicate that the interaction between digitalization and servitization has a positive effect on the firm financial performance, with firm innovation performance partially mediating the relationship. Besides, heterogeneity analysis reveals that this interactive effect is mainly manifested in capital and technology-intensive manufacturing sectors. Therefore, this paper suggests managers in manufacturing firms promote the interaction between digitalization and servitization, leveraging their synergy to advance the sustainable long-term development of both the manufacturing firm and industry.