PRODUCTIVITY IN SERVICE, MANUFACTURING, AND HYBRID INDUSTRIES: AN EMPIRICAL STUDY

Vusal Eminli
University of the Pacific

Yuriy Bots
William Jewell College

ABSTRACT

Productivity is an essential element of a business unit and of the economy at large. When
measured at highly aggregated levels, it may not accurately reveal the most productive forces of
the economic activity. This study proposes a way of disaggregating the manufacturing sector into
servitized and pure manufacturing sectors, and the service sector into manufacturized and pure
service sectors on the basis of textual analysis of the 10-K business descriptions of individual
firms. Servitized manufacturing and manufacturized service firms together form the set of hybrid
firms. The analyses of this study shows that hybrid firms are on average 18% more productive
than pure manufacturing firms, and 17% more productive than pure service firms. The results
indicate that the most productive firms are those with lines of business that allow an additional
dimension to differentiate in the product markets. Moreover, hybrid firms also appear to be better
investments for the shareholders as they yield higher levels of profit margin and return on equity
compared to non-hybrid firms.
Keywords: Productivity, productivity measurement, hybrid firms, manufacturized service firms, servitized
manufacturing firms