Give me a KIBS: Policy instruments mediating the relationship between service knowledge firms and sustainable manufacturing supply chains

Abstract

In addition to product offering, the provision of advanced services is of growing importance for manufacturing businesses to maintain competitive advantage, a phenomenon best known as servitization. Mainstream servitization literature follows different approaches to describe the success of manufacturing companies in integrating services with their corporate clients. However, literature is still silent on how new manufacturing companies, which cannot internalize service offering, generate these services through Knowledge Intensive Business Service firms (KIBS). This research contributes to this literature stream by exploring how relevant industry characteristics—in our case, stock of manufacturing firms and total number of freights transported—mediate the relationship between KIBS and employment created by new manufacturers. By using multiple data sources—Global Entrepreneurship Monitor (GEM), Spanish Institute of Statistics and Eurostat—we created a panel data comprising information for the 17 Spanish regions for the period 2006-2012 to test the proposed hypotheses. The results strongly support the view that territories with a vigorous manufacturing business environment benefit from a virtuous circle which connects new KIBS and new manufacturers’ performance through the economic activity of incumbent manufacturing businesses. The work offers value insights for scholars and policy makers on how to implement specific policies that facilitate the interaction between manufacturing and KIBS businesses, thus fuelling territorial development.