Understanding Business Orientation: Classifying and Assessing the Impact of Servitisation and Productization

Abstract

The increasing convergence of products and services presents strategic opportuni ties and analytical challenges. This thesis addresses the product-service spectrum’s ambiguity, which complicates consistent industry classification and understanding of its implications for firm performance. Objectives were to: 1) Develop the a "Vehicle-of-Value" conceptual framework for the Product-Service-Continuum; 2) apply it to a 5-point ordinal classification of Global Industry Classification Stan dard (GICS) sub-industries’ dominant product-service orientation; 3) empirically test correlations between this orientation and key performance indicators (Total Shareholder Return (TSR), Gross Margin, Revenue CAGR) for S&P 500 compa nies (2010-2024). Non-parametric statistical analysis revealed no systematic link between an industry’s product-service orientation and its overall long-term TSR. However, higher service-orientation scores correlated with increased Revenue CAGR but lower Average Gross Margins. Notably, Product-Dominant Hybrid industries ex hibited high TSR variance, suggesting distinct risk-return profiles. This research provides a replicable, nuanced classification methodology, indicating that while broad orientation alone may not drive superior market valuation for large firms, it influences specific operational financial characteristics and risk.