sustainability

Article
A Study on the Impact of Institutional Support on the
Servitization Transformation Performance of Manufacturing
Firms—Based on a Dual Mediation Model of Business Model
Innovation and Technological Innovation
Hongjun Cao *, Yuxin Fang and Jihui Sun

School of Management, Ocean University of China, Qingdao 266100, China

* Correspondence: [email protected]

Abstract: The servitization transformation of manufacturing enterprises serves as an important

impetus for the current high-quality development of the manufacturing industry. Relying on the
institutional-based view, this paper investigates the effect of institutional support on the servitization
transformation performance of manufacturing enterprises and the mediating function of business
model innovation and technological innovation in the course of this procedure. The study demon-
strates that both formal and informal institutional support have significant positive influences on
servitization transformation performance, and the active effect of informal institutional support is
stronger; institutional support has significant positive effects on business model innovation and
technological innovation; and business model innovation and technological innovation mediates
among institutional support and servitization transformation performance. This study analyzes the
Citation: Cao, H.; Fang, Y.; Sun, J. A
mechanism of the influence of institutional support on the servitization transformation performance
Study on the Impact of Institutional
of manufacturing enterprises, which thus enriches literature related to servitization transformation in
Support on the Servitization
Transformation Performance of
manufacturing enterprises and provides some insight to help managers in manufacturing enterprises
Manufacturing Firms—Based on a perform servitization transformation activities through business model innovation and technological
Dual Mediation Model of Business innovation with institutional support.
Model Innovation and Technological
Innovation. Sustainability 2022, 14, Keywords: formal institutional support; informal institutional support; business model innovation;
14349. https://doi.org/10.3390/ technology innovation; servitization transformation performance
su142114349

Academic Editor: Grigorios

L. Kyriakopoulos
1. Introduction
Received: 9 October 2022
China’s economic advancement is undergoing a shift from high growth to high-quality
Accepted: 29 October 2022
construction. As the chief source of China’s economic growth, the manufacturing industry
Published: 2 November 2022
needs to be promoted unswervingly. At present, the service transformation of manufac-
Publisher’s Note: MDPI stays neutral turing enterprises has been a major trend in worldwide industrial growth [1,2], while the
with regard to jurisdictional claims in report of the 19th National Congress of the Communist Party of China has also proposed
published maps and institutional affil- to promote the integrated growth of advanced manufacturing and modern service indus-
iations. tries [3]. The strategic guidelines of Made in China 2025 clearly state that the provinces
should promote the transformation of China’s production-based manufacturing industry
to service-based manufacturing [4]. The convergence of the manufacturing and service
industry can increase the proportion of service elements in manufacturing enterprises, shift
Copyright: © 2022 by the authors.
the business focus of manufacturing enterprises from production to service [5], improve the
Licensee MDPI, Basel, Switzerland.
This article is an open access article
additional value of products [6], and subsequently ascend the high-value chain of the indus-
distributed under the terms and
try to facilitate the high-quality construction of the manufacturing industry. In the Industry
conditions of the Creative Commons
4.0 era, as companies develop personalized solutions that require collaborative innovation,
Attribution (CC BY) license (https:// integrated supply chains, and interconnected production resources [7], the servitization
creativecommons.org/licenses/by/ transformation of manufacturing companies profoundly affects the overall operation of the
4.0/). social economy through labor utilization, capital accumulation, and technological advances,

Sustainability 2022, 14, 14349. https://doi.org/10.3390/su142114349 https://www.mdpi.com/journal/sustainability

Sustainability 2022, 14, 14349 2 of 18

and this impact cannot be underestimated [8]. The service transformation of manufacturing
enterprises is influenced by environmental, technological, and organizational factors [9].
Institutional support is an environmental change confronting manufacturing firms dur-
ing the course of servitization transformation that can help manufacturing firms stimulate
the innovation behavior of themselves, cope with difficulties in the process of servitization
transformation, as well as enhance servitization transformation performance. Researchers
have demonstrated that the innovation potential of enterprises is easier to develop in
a relatively mature institutional environment, which can promote the development of
enterprises and improve their performance level [10,11]. The majority of the currently
available research on institutional support has been centered on firms’ innovation perfor-
mance [12–14], organizational performance [15], and commercialization performance [16],
thus confirming the significant impact of institutional support on performance from an
institutional perspective; existing studies on servitization transformation performance
have attached importance to firms’ operational capacity [17,18], responsiveness [19,20],
and other internal capabilities, thus confirming multiple factors that affect servitization
transformation performance; however, the aforementioned studies do not address the
association of institutional support of servitization transformation performance. Therefore,
the relationship between the two needs to be studied in depth. On this basis, the issue
regarding the mediatory role of business model innovation and technological innovation
still needs to be clarified. Business model innovation and technological innovation are
effective tools for companies to cope with internal and external changes and can help them
adjust their development direction quickly and operate sustainably in the midst of change.
Then, the issue of whether they are instrumental in how external institutional support
impacts internal servitization transformation performance and the specific mechanism still
requires further study.
Based on the above, this paper constructs a model of manufacturing enterprises’
servitization transformation performance by relying on the institutional foundation view,
conducting an in-depth investigation into the effectiveness between formal institutional
support and informal institutional support on manufacturing enterprises’ servitization
transformation performance, and further analyzing the intermediation function for busi-
ness model innovation and technological innovation on this basis to provide some thoughts
for manufacturing enterprises to carry out servitization transformation. Major theoretical
contributions to the research are, firstly, to study the institutional support process of servi-
tization transformation of manufacturing enterprises using the institutional foundation
view to determine the significant implications on formal and informal institutional support
on the performance of servitization transformation, which thus remedies the neglect of
the influence of institutional support during previous servitization transformation studies.
Second, as business model innovation and technological innovation are internal methods
for strengthening the servitization transformation performance of manufacturing enter-
prises, this emphasizes the importance of innovation for service transformation and the
need for manufacturing enterprises to pay attention to internal innovation issues with
institutional support, which in turn helps manufacturing enterprises raise their service
transformation performance and remedies the problem of neglecting innovation in previous
service transformation.

2. Literature Review and Research Hypothesis

2.1. Theoretical Basis
In modern industrial organization theory, Harvard University scholars have proposed
the “Structure-Conduct-Performance” analysis paradigm (SCP). The main standpoint of
this paradigm is that a firm’s market behavior is influenced by the market structure, and any
market conduct taken by a firm affects firm performance [21]. The improvement of the SCP
analysis paradigm, taking into account the actual state of economical evolution in China,
can make the study more adaptable to the current domestic development scenario. Li and
Zhao (2016) transformed the SCP paradigm into an “Institution-Conduct-Performance”
Sustainability 2022, 14, 14349 3 of 18

research paradigm in the context of transition economies, analyzing the process by which
institutional support affects organizational performance [15]. This paper extends the
“Institution-Conduct-Performance” research paradigm to “Institutional Support-Firm In-
novation Conduct-Service Transformation Performance” to investigate how institutional
support can enhance servitization transformation performance by influencing business
model innovation and technological innovation.

2.2. Institutional Support and Servitization Transformation Performance

Institutional support reflects the support and protection provided by government
departments throughout the production and operation process of firms, which in turn
remedies the consequences arising from the imperfection of the institutions for compa-
nies [22]. Government departments have a critical function in the course of the formulation
of the system; therefore, whether companies can obtain the support of the system has a
direct implication on the existence and development of the company [23]. All activities
of enterprises are carried out under the institutional environment set by government de-
partments, and being supported by the system can help enterprises avoid uncertainties
and improve their competitiveness. Particularly in the transition period, on the one hand,
the enterprises undergoing the transition are supported by the system and thus receive
resources and policies, which enables them to obtain scarce resources and reduce the risks
in the production and operation process [24], thus improving their performance; on the
other hand, the enterprises undergoing the transition can, to a certain extent, grasp the
information favorable to the development of the transition in advance [25] to ensure they
can make timely responses to specific situations.
Institutional support is divided into formal institutional support and informal institu-
tional support, both of which have influenced servitization transformation performance in
different ways. To visually help readers understand and grasp the impact of two forms of
institutional support on the performance of servitization transformation, this paper draws
on the case of Wang et al. (2016) in Manufacturing servitization in the Asia-Pacific [26] and
illustrates it in the context of the research topic of this paper.
Envision Energy Technology Co., Ltd. is currently among the top three wind turbine
suppliers in China and the largest smart energy asset management service company in
the world. The National Development and Reform Commission issued the “National
Development and Reform Commission notice on wind power construction management
requirements”, requiring the domestic wind power equipment localization rate to reach
70% or more [27]. China’s National Ministry of Finance issued the “Notice of the Ministry
of Finance on the Issuance of the 2022 Renewable Energy Tariff Surcharge Subsidy Local
Funds Budget”, which allocates monthly subsidy funds to wind power and other power
generation projects to vigorously develop the wind power industry. In May 2022, the
National Development and Reform Commission and the National Energy Administration
issued the “Implementation Plan on Promoting the High-Quality Development of New
Energy in the New Era”, which states that green power pilots should be carried out to
guide enterprises toward the use of green electricity to manufacture products and provide
services. The aforementioned government policies and financial subsidies have provided
formal institutional support for the rise and service-oriented transformation of Envision
Energy. Further, the informal institutional support Envision received can be illustrated
by the example of the exploration of distributed wind power in cooperation with the
Jiangyin Municipal Government since 2017. Since distributed power generation had not
yet emerged in China at that time, there was still a lack of exploration, and Jiangyin
Municipal Government still had a wait-and-see attitude towards building-distributed
power generation. Envision actively negotiated with Jiangyin Municipal Government,
proposed reliable technical solutions, established good political connections, and convinced
the Jiangyin Municipal Government to promulgate the “Jiangyin Distributed Wind Power
Feasibility Plan”, and subsequently obtained the commercial opportunity to establish
distributed motors in Jiangyin Port [28], which relieved the pressure of local electricity
Sustainability 2022, 14, 14349 4 of 18

consumption and promoted local energy saving and emission reduction. In the process
of servitization transformation, Envision has made targeted penetration of key links in
the wind power industry chain, dividing the product life cycle into wind farm project
preparation, wind farm construction, and wind farm operation and maintenance, focusing
on supply-side innovation. Based on the analysis of the entire wind power industry chain, it
was found that the expansion of the scope of servitization to the entire life cycle of products
can maximize customer satisfaction and provide tailor-made wind power solutions for
specific market segments and the special needs of customers [26].
Formal institutional support is one of the key signs that the government is providing
economic support [29], including the provision of programs and policies, information
technology, and financial support that is conducive to business development. Actions
by government departments, such as providing loans to firms and granting licensing
status [22], can help firms reduce risks in the production and operation process and drive
them to innovate, thus improving their performance [30]. Formal institutional support
provides companies with more options and enables them to find the best solution for their
transformation through trial and error. The initiative of formal institutional support is in the
hands of government departments, and manufacturing companies need to judge whether
the formal institutional support provided by government departments is beneficial to the
transformation of the company and then carry out the transformation activities. However,
in most cases, the policies and financial support provided by government departments are
conducive to the service transformation of manufacturing enterprises. On this basis, this
paper proposes the following hypothesis:
H1a: Formal institutional support has a positive impact on servitization transition performance.
Unlike formal institutional support, the initiative of informal institutional support is
in the hands of enterprises, which can obtain support from government departments by
establishing a good relationship with them [31]. Informal institutional support manifests
itself in its reliance on emotional and behavioral connections between companies and gov-
ernment departments, rather than formal regulations, systems, etc. By establishing good
relationships and rapport with government departments, firms are able to obtain informal
institutional support to a certain extent. After obtaining informal institutional support,
enterprises can form political connections with government departments [32], and further
obtain information that is beneficial to the development of enterprises through political con-
nection behavior, which can promote enterprises to carry out original innovation [33] and
improve their competitive advantages [34]. At the same time, the enterprise’s stakeholder
enterprises can also reach a consensus with the enterprise, establish a good partnership,
and promote cooperation between enterprises. Therefore, in this paper, informal institu-
tional support is defined as special support or resources obtained by firms through the
establishment of political ties with government agencies at the local or national level [35]
for business cooperation [36], the identification of potential business opportunities in gov-
ernment development plans [37] etc., and is a reflection of political actions taken by firms
on their own initiative [25]. When enterprises form a stable relationship with government
departments and stakeholders, they can further obtain more support, to a certain degree, so
as to foster the transformation and development of enterprises. Therefore, manufacturing
companies need to manage their relationship with government departments during the
transformation to servitization, establish political connections, and obtain information that
is beneficial to the companies to help them make decisions and improve the performance
of servitization transformation. For this purpose, in this paper, the following assumption
is made:
H1b: Informal institutional support has a positive impact on servitization transition performance.
Sustainability 2022, 14, 14349 5 of 18

2.3. Institutional Support and Business Model Innovation

Business model innovation is the thoughtful reconfiguration of one or more logical
bases of commercial benefits to companies, consumers, and other interested parties [38].
The focus of business model innovation is to transform the logic of valuation creation of the
enterprise before by using the inner and outer resources of the firms to design a new value
chain system, and then realize the innovation of business model [39]. Hence, the process of
business model innovation is compromised in terms of the institutions in the environment
that companies operate in. Traditional institutional theory suggests that legitimation holds
a prominent role in business model innovation [40]. Within the context of business model
innovation, legitimation can be comprehended in terms of the specific social system’s
perceptions and assumptions regarding the methods and outcomes of business model
innovation. That is, business model innovation does not only concern the behavior of the
firm itself and will be supported or constrained by the system in the process. When a
firm’s business model innovation is favored by the institution, the firm has the capability to
perceive the requirements and anticipations of the institutional environment for the firm and
thus design the business model according to the information provided by the institutional
environment [41]. This also places a demand on how companies can build a stable business
model based on gaining legitimacy [42]. Companies should choose different ways to
build business models based on the legitimacy of different system circumstances, focusing
upon the resources and capabilities they can provide when facing the impact of formal
institutional environments, while actively seeking network reconstruction opportunities
when facing the impact of informal institutional environments [43]. When dealing with
how different types of institutional support impact on business model innovation, it is also
relevant to focus on the implication that business model innovation has on institutional
support. The existing institutional support will be affected and changed even after the
business model innovation, and then the business model will need to be innovated twice to
adapt to the new institutional environment [44]. Regardless of the changes in institutional
support, business models will be influenced by institutions to innovate. Based on this
premise, in this paper, the following proposition is made:
H2: Institutional support has a positive impact on business model innovation.

2.4. Institutional Support and Technological Innovation

Technological innovation in enterprises requires, in principle, a strong resource base
that can guarantee the continuity for technological innovation initiatives in the enterprise.
Technological innovation requires, on the one hand, the improvement of products and
services on the basis of the existing ones and provide high-quality ones; on the other hand,
technological innovation requires being attentive to the current market, the ability to meet
consumer needs [45] and forging new offerings and services. This also means that techno-
logical innovation in enterprises is a huge investment, but it does not guarantee effective
output and has great risks. For most firms, especially those in transition, the resource base
available does not support the firm’s innovation activities. In this case, enterprises can
strengthen their resource base to a great extent if they can obtain institutional support [46].
To a certain extent, the government sector holds many scarce resources, which enterprises
also need for their innovation activities. Getting institutional support can also make up
for the problem of enterprises’ own resources, reduce the risk of their innovation, raise
their awareness of technological innovation, and promote their technological innovation
behavior. At the same time, the market mechanism in which technological innovation
takes place is not always effective, thus increasing the rent-seeking costs for firms and
consequently undermining their technological innovation capacity [47]. In this case, it
is necessary to regulate the system by providing financial support, project support, and
information support to make up for the lack of market, to improve the willingness of
enterprises to carry out technological innovation, and thus promote their technological
innovation behavior.
Sustainability 2022, 14, 14349 6 of 18

For enterprises, technological innovation not only requires the support of formal
systems as enterprises also prefer the support of informal systems. Through informal
institutional support, firms can obtain better resource conditions or learn about the latest
policies faster than other firms so that they can adjust the direction of technological inno-
vation and improve their competitiveness in a timely manner. In addition, government
departments and their officials can gain relevant political benefits in the development of
local enterprises [48], so they are also willing to form political ties with local enterprises
and give certain informal support to local enterprises, especially technologically innovative
enterprises, to stimulate their technological innovation activities. Based on this premise,
the hypothesis is formulated as thus:
H3: Institutional support has a positive impact on technological innovation.

2.5. The Mediating Role of Business Model Innovation and Technological Innovation
Unlike previous service companies, while the service transformation of manufacturing
companies does not directly provide a new type of service, it does provide additional
services based on manufacturing companies’ products or technologies [49]. Therefore,
the business model and technology for manufacturing companies also determines the
performance of service transformation of manufacturing companies. Even if a manufactur-
ing company has no experience in providing services, it can improve the performance of
service transformation through business model innovation and technology innovation. As
servitization is a multi-subject-oriented strategy, the implementation of service activities
requires manufacturing companies to innovate the business model elements [50]. The shift
from a linear servitization strategy to a more sustainable service-oriented business model
that provides resource efficiency-related services to customers will be the most resilient
and profitable in the future [51] and is one of the challenges companies will face with a
servitization-based business model. Companies with business model innovation can, on
the one hand, promote servitization transformation performance by looking internally at
all the value activities of the enterprise and innovating core processes to integrate and form
a value chain [52]; on the other hand, they can look externally at the market environment
faced by the enterprise and innovate or reconfigure the business resources of the enterprise
according to the market they serve, thus promoting servitization transformation [53]. Tech-
nologically innovative companies are able to identify the current technological problems in
their businesses, learn quickly, update the currently available technologies and products,
and provide services to match them. At the same time, service improvement brought about
by the technological progress of the enterprise can also gain the trust of customers, which
can help the enterprise establish a long-lasting cooperation with customers and indirectly
improve the performance of the enterprise service-oriented transformation [54].
In summary, institutional support relies on the advantages of the system to give ef-
fective help to manufacturing enterprises by making up for the shortcomings of existing
policies and reducing the risks involved in the transformation process, thus improving the
performance of servitization transformation. Formal institutional support provides policy,
project, and financial support to drive service transformation through systematic support,
while informal institutional support provides more information and timely responses
through political connections between enterprises and government departments. However,
external institutional support alone does not necessarily improve the service transformation
performance of manufacturing enterprises; it needs to be combined with internal business
model innovation and technological innovation. After obtaining institutional support,
enterprises need to apply the obtained institutional support in servitization transformation
and promote servitization transformation performance by converting the obtained institu-
tional support through business model innovation and technological innovation. Business
model innovation, as an intermediate strategic action linking the support provided by the
system with the firm’s own business model, allows firms to translate the ability to detect
and analyze institutional support into specific strategic actions that take advantage of these
developments [55]. Innovating the shift of existing business models toward servitization
 the obtained institutional support through business model innovation and technological
innovation. Business model innovation, as an intermediate strategic action linking the
support provided by the system with the firm’s own business model, allows firms to trans-
late the ability to detect and analyze institutional support into specific strategic actions
Sustainability 2022, 14, 14349 that take advantage of these developments [55]. Innovating the shift of existing business 7 of 18
models toward servitization and focusing on the business model elements of the enter-
prise’s servitization transformation process promotes servitization transformation perfor-
mance [7]. Government
and focusing support
on the business and investment
model elements ofcontribute to the servitization
the enterprise’s entrepreneurial spirit of
transforma-
enterprises and promote technological innovation [56], while technological
tion process promotes servitization transformation performance [7]. Government support innovation
can
andrely on relevant
investment policies
contribute to and programs provided
the entrepreneurial spirit by the government
of enterprises system,techno-
and promote com-
bined
logical innovation [56], while technological innovation can rely on relevant policies ele-
with the direction of servitization transformation and attachment of service and
ments to technological
programs provided by innovation
the governmentto achieve
system,the result of with
combined technology and service
the direction co-inno-
of servitization
vation [57]. Relying
transformation andonattachment
business model innovation
of service andto
elements technological
technological innovation,
innovation manufactur-
to achieve
ing enterprises can make full use of the support given by the system
the result of technology and service co-innovation [57]. Relying on business model to achieve the goal of
inno-
service transformation. Accordingly, in this paper, the hypotheses below
vation and technological innovation, manufacturing enterprises can make full use of theare proposed:
support given by the system to achieve the goal of service transformation. Accordingly, in
H4a: Business
this paper, themodel innovation
hypotheses below plays
are aproposed:
mediating function between institutional support and
servitization transformation performance.
H4a: Business model innovation plays a mediating function between institutional support and
servitization
H4b: transformation
Technological performance.
innovation plays a mediating function between institutional support and ser-
vitization transformation
H4b: Technological performance.
innovation plays a mediating function between institutional support and
servitization transformation performance.
Combining the above hypotheses, the frame of research constructed for the paper is
Combining the above hypotheses, the frame of research constructed for the paper is
depicted in Figure 1.
depicted in Figure 1.

Researchframework.
Figure1.1.Research
Figure framework.

3. Research Methodology
3. Research Methodology
3.1. Sample and Data Collection
3.1. Sample and Data Collection
Preliminary questionnaires were formed by first combining proven scales of domestic
and Preliminary questionnaires
foreign scholars were formed
and modifications by firstand
by experts, combining proven scales
then conducting of domes-A
pre-research.
tic and foreign scholars and modifications by experts, and then conducting
total of 100 valid questionnaires was collected from a small sample through online pre- pre-research.
Astudy
total and
of 100 valid questionnaires
analyzed for reliability.was
Thecollected
reliabilityfrom a small
results show sample through
that, on the oneonline
hand,pre-
the
study and analyzed
Cronbach’ forformal
α values of reliability. The reliability
institutional support,results
informalshow that, on the
institutional one hand,
support, the
business
Cronbach’ α valuestechnological
model innovation, of formal institutional
innovation support, informal
and service institutionalperformance
transformation support, busi-are
ness
all greater than 0.7 (0.878, 0.926, 0.930, 0.929, 0.917, in that order), which performance
model innovation, technological innovation and service transformation validates the
are all greater
stability than 0.7 (0.878,
and reliability of the0.926,
scale.0.930,
On 0.929, 0.917,
the other in that
hand, theorder),
resultswhich validates the
of KMO-Bartlett’s
stability
spherical test showed that the KMO values were all greater than 0.7 (0.723, 0.718,spher-
and reliability of the scale. On the other hand, the results of KMO-Bartlett’s 0.814,
ical testand
0.779, showed that
0.848, inthe
thatKMO values
order), andwere
all ofallthem
greater
werethan 0.7 (0.723,at
significant 0.718, 0.814, level,
the 0.001 0.779, thus
and
0.848, in that
validating theorder), andofall
validity theofscale.
themThewere significant
final at the 0.001
questionnaire level, thus
was formed validating
by further the
refining
validity of the scale.
the measurement The finalthrough
questions questionnaire
pre-study. wasAmong
formedthem,by further refining
the basic the measure-
information of the
ment questionsenterprises
respondents’ through pre-study. Among them,
are single-choice the basic
questions, information
and other of the
variables arerespondents’
measured by
Likert 5-point scale, in which 1 to 5 indicate “very unconformity”, “unconformity”, “Fair”,
“Conform”, and “Very Conform”. Each variable contains 3–7 items, and the variables are
measured in multiple ways.
The sample data of this study are mainly from the Shandong, Hebei, and Jiangsu
regions, and the research subjects are the manufacturing enterprises in the above regions
that choose service transformation. The questionnaires are collected through two channels:
the alumni and MBA students who meet the requirements on the university platform and
Sustainability 2022, 14, 14349 8 of 18

the personal social connections of the authors. From September to November 2020, a total
of 400 questionnaires were distributed, and the questionnaires were set up with a reverse
question test filtering mechanism to remove short response times, complete duplication
of answer options, reverse question test failures, contradictory content responses, and
incomplete questionnaires, with a total of 310 valid questionnaires recovered, with a valid
recovery rate of 77.5%. The basic situation of the sample is shown in Table 1. The Harman
one-way test was used to test whether the data had homophily bias, and by analyzing the
unrotated factors of all question items, it was observed that the first principal component
constitutes 46.2% of the total variance, which was less than 50%, indicating that the data
did not have any problems with homophily bias.

Table 1. Sample statistics.

Sample Classification Number Proportion

State-owned enterprises 74 23.9%
Nature of Private enterprises 187 60.3%
enterprise Three-funded enterprises 42 13.5%
Others 7 2.3%
Small Business 62 20.0%
Enterprise size Medium-sized enterprises 178 57.4%
Large Enterprises 70 22.6%
5 years or less 55 17.7%
Year of enterprise
6–15 years 166 53.6%
establishment
16 years and more 89 28.7%
Communication electronics manufacturing 23 7.4%
Chemical and chemical manufacturing 41 13.2%
Universal Machinery Manufacturing 47 15.2%
Electronic mechanical and device
39 12.6%
Type of industry manufacturing
Transportation device manufacturing 47 15.1%
Metal and non-metal manufacturing 47 15.1%
Specialized device manufacturing 33 10.7%
Furniture device manufacturing 21 6.8%
Other Manufacturing 12 3.9%

3.2. Variable Measurement

Institutional support. The scales of Li and Atuahene-Gima (2001) [58], Peng and
Luo (2000) [59] and Chen (2020) [60] were used to measure formal institutional support
and informal institutional support, which consisted of 8 items. Formal institutional sup-
port includes five items, such as “government departments provide relevant policies and
programs for the development of this enterprise”, while informal institutional support
includes three items, such as “this enterprise has a good relationship with government
departments”.
Business model innovation. The scale of ZOTT and Amit (2008) [57] was used, which
includes four items, such as “The firm’s business model employs innovative transaction
methods”.
Technological innovation. The scale of Camison and Villar-Lopez (2014) [61] was
borrowed and included four items, such as “This firm invests a lot of money in technological
research and development”.
Servitization transformation performance. Drawing on the scales of Oliva, Gebauer,
and Brann (2012) [62] and Tian (2012) [63], including “increasing effectiveness in providing
product or service solutions”, “increasing performance in providing products or services”
and “increasing customer satisfaction with the product or service” and seven other items.
Control variables. In this paper, the characteristics of the firm and the size of the enter-
prise were set as control variables to exclude any effect on the performance of servitization
transformation.
Sustainability 2022, 14, 14349 9 of 18

4. Empirical Results and Analysis

4.1. Reliability and Validity Analysis
The reliability test was performed on the 23 measurement items with a KMO value
of 0.865 and a significance of less than 0.001 for Bartlett’s test. Six factors had eigenvalues
greater than 1 and there was no cross-loading. Next, further reliability and validity tests
were conducted, with the results shown in Table 2. First, the alpha reliability factors of
each variable were greater than 0.8 and the combined reliability CRs were higher than 0.9,
suggesting good reliability of the scale. Secondly, the factor loadings of all measurement
entries were higher than 0.6 and the AVE values were greater than 0.6, demonstrating
that the convergent validity of the scale was favorable. Finally, the correlation coefficients
among the factors were lower than the square root of AVE (see Table 3), indicating good
discriminant validity of the scale. In conclusion, the reliability and validity of the scale
were good.

Table 2. Results of reliability and validity tests of the scale.

Variables Measurement Question Items Factor Load α Value

Government departments have provided relevant policies and projects for the development of
0.899
this enterprise
Formal The government sector provides the necessary information and technology for the
Institutional 0.898
development of this enterprise
Support
0.886
AVE = 0.696 The government sector has provided financial support for the development of this enterprise 0.908
CR = 0.919
Government departments have provided assistance to introduce technology and techniques
0.790
for this enterprise
Government departments provide assistance for IP protection for enterprises 0.646

Informal Our company takes various measures to build relationships with government
0.944
Institutional departments at all levels
Support The company has a good relationship with government departments 0.956 0.902
AVE = 0.840
CR = 0.940 The relationship with government departments is important to the development of
0.846
this enterprise
Business The business model of our company uses an innovative trading approach 0.950
Model
The business model of our company can provide value-added products or services 0.962
Innovation 0.940
AVE = 0.850 The business model of this enterprise has a new way of profitability 0.946
CR = 0.958
The business model of this enterprise has a new profit point 0.823
Our company is always quick to identify customer needs 0.947
Technology
Innovation Our company offers favorable remuneration to our R&D staff 0.943
0.931
AVE = 0.834 Our company has invested heavily in technology research and development 0.929
CR = 0.953
This enterprise cooperates with universities and research institutions to innovate 0.829
Annual sales revenue growth becomes larger after servitization transformation 0.782
Main business profit margin growth becomes faster after servitization transformation 0.783
Servitization
Transformation The profitability is increasing after servitization transformation 0.817
Performance 0.918
The share of service revenue in revenue is increasing 0.849
AVE = 0.671
CR = 0.935 The effectiveness of providing product or service solutions continues to improve 0.827
The performance rate of the product or service provided is increasing 0.845
Customer satisfaction with the product or service is constantly increasing 0.828
Sustainability 2022, 14, 14349 10 of 18

Table 3. Means, standard deviations and correlation coefficients of each variable.

Variables Mean SD 1 2 3 4 5 6 7 8 9
Nature of Enterprise 1.940 0.680 1
Enterprise Size 2.030 0.653 −0.186 ** 1
Year of Enterprise Establishment 2.110 0.674 −0.163 ** 0.472 ** 1
Industry Type 4.600 2.184 0.152 ** −0.009 0.032 1
Formal Institutional Support 4.392 0.465 0.095 −0.089 −0.037 0.115 * 0.834
Informal Institutional Support 4.297 0.540 −0.009 −0.058 −0.001 0.037 0.442 ** 0.917
Business Model Innovation 4.302 0.545 0.006 −0.049 −0.060 0.048 0.408 ** 0.526 ** 0.922
Technology Innovation 4.256 0.513 −0.031 −0.003 −0.086 0.067 0.442 ** 0.472 ** 0.546 ** 0.913
Servitization Transformation Performance 4.324 0.488 0.040 0.003 −0.042 0.051 0.468 ** 0.489 ** 0.569 ** 0.611 ** 0.819
Note: *, ** denote p < 0.05, p < 0.01, respectively; diagonal bold values are square root of AVE.

4.2. Descriptive Statistical Analysis

The means, standard deviations, and correlation coefficients of the variables are shown
in Table 3. It can be found that formal institutional support and informal institutional
support (r = 0.442, p < 0.01), business model innovation (r = 0.408, p < 0.01), technological
innovation (r = 0.442, p < 0.01), and servitization transformation performance (r = 0.468,
p < 0.01) are significantly positively correlated. Informal institutional support and business
model innovation (r = 0.526, p < 0.01), technological innovation (r = 0.472, p < 0.01) and
service transformation performance (r = 0.489, p < 0.01) were statistically significant and
positively associated. Also, business model innovation and technological innovation
(r = 0.546, p < 0.01) and servitization transformation performance (r = 0.569, p < 0.01) were
significantly positively associated, and finally, technological innovation and servitization
transformation performance (r = 0.611, p < 0.01) were significantly positively associated.
Further tests for the multicollinearity problem show that the maximum values of
VIF for the explanatory variables of each regression model are 1.384, 1.570, 1.670, and
1.612, respectively, all of which are lower than 3, illustrating that no multicollinearity
problem exists.

4.3. Regression Analysis

Using cascade regression analysis, this research tests the hypotheses by controlling for
variables such as firm nature and firm size, and Table 4 shows the test results.

Table 4. Regression analysis results.

Business Model Technology Servitization Transformation

Variables Innovation Innovation Performance
Model 1 Model 2 Model 3 Model 4 Model 5 Model 6 Model 7 Model 8
Nature of Enterprise −0.015 −0.019 −0.055 −0.066 0.030 0.018 0.025 0.047
Enterprise Size −0.028 0.023 0.043 0.093 0.035 0.087 0.079 0.047
Year of Enterprise Establishment −0.051 −0.066 −0.118 −0.131 −0.056 −0.069 −0.044 −0.012
Industry Type 0.051 0.012 0.079 0.035 0.048 0.001 −0.003 −0.014
Formal Institutional Support 0.218 *** 0.295 *** 0.314 *** 0.233 *** 0.186 ***
Informal Institutional Support 0.430 *** 0.345 *** 0.355 *** 0.195 *** 0.205 ***
Business Model Innovation 0.373 ***
Technology Innovation 0.434 ***
F 0.519 23.590 *** 1.323 22.543 *** 0.468 24.252 *** 31.118 *** 35.936 ***
R-squared 0.007 0.318 0.017 0.309 0.006 0.324 0.419 0.454
∆F 69.269 *** 63.892 *** 71.389 *** 49.176 *** 71.960 ***
∆R-squared 0.312 0.292 0.318 0.095 0.130
Note: *** indicates p < 0.001; diagonal bold values are square root of AVE.

The influence of institutional support on servitization transformation performance.

Model 5 examines the influence of control variables on servitization transformation per-
formance, and model 6 adds institutional support to model 5. Comparing model 5 and
model 6, it is evident that the control variables have no significant effect on servitization
transformation performance, and formal institutional support (β = 0.314, p < 0.001) and
Sustainability 2022, 14, 14349 11 of 18

informal institutional support (β = 0.355, p < 0.001) have a significant positive effect on
servitization transformation performance, which is similar to the findings of Wang et al.
(2022) [64]. Hypotheses H1a and H1b were tested. Furthermore, the informal system
is more supportive of influence, meaning that informal institutions are more supportive
than formal institutions. The possible reason for this is that political connections reduce
the failure rate of service transformation more [65] and mitigate the risks associated with
corporate change [66].
The influence of institutional support on business model innovation. Models 1 and 3
investigated the influence of control variables on business model innovation and technolog-
ical innovation, and the results showed no significant effect of control variables on business
model innovation and technological innovation. Institutional support was added to this,
and the results showed that formal institutional support (β = 0.218, p < 0.001) and informal
institutional support (β = 0.430, p < 0.001) had a significant positive effect on business
model innovation; and formal institutional support (β = 0.295, p < 0.001) and informal insti-
tutional support (β = 0.345, p< 0.001) also had a significant positive effect on technological
innovation, consistent with the findings of Zhang et al. (2017) [67]. Hypotheses H2 and H3
were tested.
The mediating function of business model innovation and technological innovation.
From the above analysis, it is clear that institutional support has a significant positive
effect on both business model innovation and technological innovation, and business
model innovation and technological innovation also have a significant positive effect
on servitization transformation performance. In order to verify the mediating function
of business model innovation and technological innovation in institutional support and
servitization transformation performance, the servitization transformation performance
is taken as the dependent variable, and for the control variables, institutional support
is added to the model in turn, and then business model innovation and technological
innovation are added, respectively. By comparing model 6 and model 7, it can be seen
that business model innovation (β = 0.373, p < 0.001) has a significant positive effect on
servitization transformation performance. Formal institutional support (β = 0.233, p < 0.001)
and informal institutional support (β = 0.195, p < 0.001) still have a significant positive
effect on servitization transformation performance, but the regression coefficients β of the
formal and informal institutional support on servitization transformation performance
decrease from 0.314 (model 6) and 0.355 (model 6), respectively, to H4a, as has been verified.
By comparing model 6 and model 8, it can be seen that technological innovation (β = 0.434,
p < 0.001) has a significant positive effect on servitization transformation performance.
Formal institutional support (β = 0.186, p < 0.001) and informal institutional support
(β = 0.205, p < 0.001) still had a significant positive effect on servitization transformation
performance, but the regression coefficients β of formal and informal institutional support
on servitization transformation performance decreased from 0.314 (model 6) and 0.355
(model 6), respectively, to 0.186 (model 8) and 0.205 (model 8), indicating that technological
innovation acts as a mediator in the influence of institutional support on servitization
transformation performance. H4b is verified.

4.4. Robustness Test

To further verify the dual mediation function of business model innovation and tech-
nological innovation, this study used the Bootstrap method with a 95% confidence interval
to randomly select 5000 samples for robustness testing, and Table 5 demonstrates the results.
In the verification of the mediating function of business model innovation and technological
innovation on formal institutional support and service transformation performance, the
efficacy value of formal institutional support on service transformation performance is
0.195 with a 95% confidence interval [0.088, 0.298], which does not contain 0. The direct
effect is significant, and the 95% confidence interval for the mediating functions of busi-
ness model innovation and technological innovation are [0.069, 0.191] and [0.114, 0.241],
both of which do not contain 0 and have significant indirect effects; thus, business model
Sustainability 2022, 14, 14349 12 of 18

innovation and technological innovation mediate the effect of formal institutional support
on the performance of service transformation, which is in accordance with the outcomes
of the regression analysis. In the verification of the mediating function of business model
innovation and technological innovation on informal institutional support and servitization
transformation performance, the effect value of informal institutional support on serviti-
zation transformation performance is 0.150 with a 95% confidence interval [0.040, 0.262],
which does not contain 0, and the direct effect is significant, and the 95% confidence interval
of the mediating function of business model innovation and technological innovation are
[0.071, 0.196] and [0.110, 0.226], both of which do not contain 0 and have significant indirect
effects; thus, business model innovation and technological innovation mediates effect of
informal institutional support on the performance of servitization transformation, which is
also in accordance with the outcomes of the regression analysis.

Table 5. Robustness tests for two-mediator effects.

95% Confidence Interval

Paths Effect Value Standard Error
Lower Bound Upper Bound
Formal Institutional Support →
0.195 0.054 0.088 0.298
Servitization Transformation Performance
Informal Institutional Support →
0.150 0.056 0.040 0.262
Servitization Transformation Performance
Formal Institutional Support → Business
Model Innovation → Servitization 0.126 0.032 0.069 0.191
Transformation Performance
Formal Institutional Support →
Technology Innovation → Servitization 0.175 0.033 0.114 0.241
Transformation Performance
Informal Institutional Support →
Business Model Innovation → 0.129 0.032 0.071 0.196
Servitization Transformation Performance
Informal Institutional Support →
Technology Innovation → Servitization 0.166 0.030 0.110 0.226
Transformation Performance

5. Research Conclusions and Implications

5.1. Research Conclusions
This study relies on the institutional foundation view, targets manufacturing firms,
constructs a model of manufacturing enterprises’ servitization transformation performance,
investigates the effects of formal institutional support and informal institutional support on
manufacturing enterprises’ servitization transformation performance, and further analyzes
the dual mediating roles of business model innovation and technological innovation across
institutional support and servitization transformation performance. The findings show
that (1) both formal and informal institutional support contribute significant positive
influences on the servitization transformation performance among manufacturing firms,
and the positive influence of informal institutional support is stronger. (2) Institutional
support significantly and positively impacts business model innovation and technological
innovation. (3) Business model innovation and technological innovation mediate the
relationship between institutional support and service transformation performance of
manufacturing enterprises.

5.2. Theoretical Contributions

First, relying on the institutional foundation view [68], this paper selects manufactur-
ing enterprises in servitization transformation as the research object from the enterprise
Sustainability 2022, 14, 14349 13 of 18

level, and investigates the impact of external institutional support on internal servitiza-
tion transformation performance by constructing a model of manufacturing enterprises’
servitization transformation performance. It is indicated in the results that both formal
institutional support and informal institutional support contribute a positive effect on
the servitization transformation performance of manufacturing firms, and the impact of
informal institutional support is greater than that of formal institutional support. It indi-
cates that both the systematic support of formal institutional support and the politicized
connection of informal institutional support can obtain political resources [69], promote
manufacturing enterprises to implement internal innovation events during the process of
servitization transformation, shift the focus of enterprises from products to services [70],
and improve the servitization transformation performance [66]. While previous studies
on the servitization transformation of manufacturing enterprises have focused on the
study of internal resource mobilization [71] and market responsiveness [72,73], this paper
distinguishes itself from previous studies on the internal capabilities of enterprises and
shifts the research direction to the external institutional environment of enterprises, in-
vestigates the viewpoint of external institutional support to enhance the performance of
servitization transformation of manufacturing enterprises, and enriches the investigation
of the servitization transformation of manufacturing enterprises at a level for institutional
support.
Second, this article investigates the effect of institutional support on business model
innovation and technological innovation, and the study finds that institutional support
positively promotes firms to engage in business model innovation and technological in-
novation. The results illustrate that formal and informal institutional support can help
manufacturing firms obtain external help, reduce the risk of firm innovation [74], alleviate
the financial pressure on corporate innovation [75], stimulate firms’ willingness to inno-
vate [76], and thus promote their innovative behavior. Specifically, institutional support
indicates that the current institutional environment in which firms operate expects man-
ufacturing firms to pay attention to service elements [77], and firms will move closer to
service when innovating business models [78] for the sake of institutional support. Further,
institutional support can also bring a great deal of resources to firms, reduce the cost of
innovation [79], and promote firm innovation, while good institutional support can also
offer a stable innovation environment [80,81] and motivate firms to innovate and stimulate
the motivation of enterprise innovation. The study confirms that institutional support
is closely related to business model innovation and technological innovation, and good
institutional support promotes business model innovation and the technological innovation
of enterprises.
Finally, this article investigates the mediating role of business model innovation and
technological innovation between institutional support and service transformation per-
formance of manufacturing firms by using business model innovation and technological
innovation as mediating variables. The results suggest that business model innovation and
technological innovation mediate the relationship between institutional support and the
service transformation performance of manufacturing firms. From the results, it is clear that
institutional support influences the service transformation performance of manufacturing
enterprises, and institutional support provides an innovative environment for manufactur-
ing enterprises, which is advantageous for business model innovation and technological
innovation, and further enhances the service transformation performance of manufacturing
enterprises. This result demonstrates the structure of “institutional support-firm innovation
behavior-service-transformation performance”, which shows that the innovation behavior
of firms plays a mediating role; that is, institutional support can influence business model
innovation and the technological innovation of manufacturing firms to improve service
transformation performance.
The servitization transformation of manufacturing is an important way for China’s
economy to seize the opportunity of green development and achieve cleanliness. The
research in this paper helps to reveal the mechanism and evolutionary process of heteroge-
Sustainability 2022, 14, 14349 14 of 18

neous institutional support for servitization transformation mediated by business model

innovation and technological innovation, and deepens the relationship between formal
institutional support represented by systemic support and informal institutional support
represented by political linkages and the performance of servitization transformation. The
Chinese economic system differs from other countries in that China has the influence of si-
multaneous economic system and social structure transformation and large population size;
therefore, the transformation of manufacturing servitization in China also produces certain
differences from other countries. This study enriches and expands the theoretical explo-
ration of manufacturing servitization transformation in an economic system with Chinese
characteristics, alleviates the relationship between institutional support from the Chinese
government and manufacturing servitization transformation strategies, and has theoretical
reference implications for the Chinese government to improve institutional support.

5.3. Policy Implications

On the one hand, for government departments, they should adopt a combination of
formal institutional support and informal institutional support to promote manufactur-
ing enterprises to execute internal innovation initiatives and improve performance in the
service transformation of manufacturing enterprises. Government departments ought to
attach importance to the service transformation of manufacturing enterprises and provide
certain assistance to boost the quality of manufacturing growth via promoting the ser-
vice transformation of manufacturing enterprises, thus promoting qualitative progress of
Chinese economics. In terms of formal institutional support, service transformation of man-
ufacturing enterprises can provide local jobs, enhance people’s welfare and stimulate local
economical expansion. In terms of informal institutional support, government departments
should maintain close contact with local enterprises and establish a good government-
enterprise relationship so that they can understand the current situation of enterprises
and solve problems in a timely manner. However, it should be noted that the entirety of
institutional support should be based on formal institutional support and supplemented by
informal institutional support to ensure that the service transformation of manufacturing
enterprises enjoys more policies in relevant documents and regulations, while political ties
are to ensure that government departments are in contact with manufacturing enterprises.
On the other hand, manufacturing enterprises should balance internal and external
institutional support, and at the same time, carry out innovation activities within the en-
terprise to improve the performance of service transformation. For external institutional
support, enterprises should actively seek external institutional support, obtain more poli-
cies, projects, and technology support from government departments, and establish good
political ties with government departments, maintain communication in daily production
and operation processes, and make full use of institutional support to improve service
transformation performance. For internal innovation, enterprises should fully mobilize the
willingness to innovate within the enterprise and carry out internal business model inno-
vation and technological innovation activities that build on institutional support. Further,
enterprises should emphasize the service element of enterprises on the basis of legality,
shift the focus of enterprises from products to services, and improve the added value
of products, and at the same time, make efforts to learn current advanced technologies,
upgrade technologies, and realize technological innovation. In addition, manufacturing
enterprises should also establish a coordination mechanism for servitization transformation,
which can combine institutional support and internal innovation organically, and flexibly
adjust the process of enterprise servitization transformation to improve the performance of
manufacturing enterprises’ servitization transformation.

5.4. Research Shortcomings and Prospects

This article investigates the impact of institutional support on the service transforma-
tion performance of manufacturing firms; however, some shortcomings still remain. To
begin with, this article investigates the influence of institutional support on the service
Sustainability 2022, 14, 14349 15 of 18

transformation performance of manufacturing firms within the domestic scenario, but

whether the effect is consistent in other national and regional contexts remains to be studied
in depth. Second, this paper used a questionnaire survey to collect data, which was affected
by the survey time and other conditions, and analyzed cross-sectional data; however, insti-
tutional support may have different effects in different periods of service transformation of
manufacturing enterprises; hence, further research is needed to supplement longitudinal
tracking data. Finally, as the current research has demonstrated the interactional effect
of business model innovation and technological innovation on enterprise performance,
subsequent research can further investigate the impact of the interaction between the two
on the performance of service transformation of manufacturing enterprises.

Author Contributions: Conceptualization, Y.F. and J.S.; formal analysis, Y.F. and J.S.; investigation,
Y.F. and J.S.; writing—original draft preparation, Y.F. and J.S.; writing—review and editing, Y.F. and
J.S.; visualization, Y.F. and J.S.; supervision, H.C.; project administration, H.C.; funding acquisition,
H.C. All authors have read and agreed to the published version of the manuscript.
Funding: This research was funded by the Natural Science Foundation of Shandong Province, grant
number ZR2021MD073.
Institutional Review Board Statement: Not applicable.
Informed Consent Statement: Not applicable.
Data Availability Statement: The data presented in this study are available on request from the
corresponding author.
Conflicts of Interest: The authors declare no conflict of interest.

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