Executive cognition and servitization of manufacturing firms: Empirical evidence from listed companies in China

Abstract

Servitization is a key strategy for enhancing competitiveness in manufacturing, yet the managerial drivers behind this transformation remain underexplored. This study investigates the impact of top executives’ service cognition on servitization using a novel index derived from text-mined disclosures of Chinese listed manufacturing firms (2007–2020). Results show that executives’ service cognition significantly promotes servitization, even after controlling for endogeneity using instrumental variables and Heckman’s two-stage model. Mechanism analysis reveals that this cognitive orientation enhances human capital accumulation and R&D investment, which in turn drive higher service levels. Furthermore, the relationship is moderated by executive power concentration and regional internet penetration. Heterogeneity tests indicate stronger effects in high-tech industries, state-owned enterprises, and large firms. These findings highlight the critical role of executive cognition in shaping strategic transformation and offer practical implications for firms and policymakers aiming to foster servitization through leadership development and supportive digital infrastructure.