Development of a universal approach for measuring servitization

Although interest in servitization is growing, researchers and practitioners lack a universally accepted approach to measure it in industrial firms. In this paper, we develop and empirically validate a comprehensive measurement approach to address this gap. We begin by defining servitization and critically reviewing existing measurement methods. We develop a three-test approach, refined through pre-pilot and pilot studies with industrial executives, followed by a nationwide survey of 701 firms. The approach captures three dimensions: revenue share between products and services, types of services offered, and revenue share from each service. This reduces construct ambiguity and supports more reliable empirical analysis and theory-building in business model innovation. We introduce 'servitization intensity' to quantify a firm’s service footprint and results confirm robustness and reveal variation in adoption. We propose a fourth test to capture scope of service offerings and provider responsibility to offer a richer and more accurate measurement of servitization.