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Reviving The Manufacturing Industry Through Servicification Strategy: Evidence From Indonesian Microdata

Author

Listed:
  • MHA Ridhwan

    (Bank Indonesia)

  • Nurul Pratiwi

    (Bank Indonesia)

  • Sulistiyo K. Ardiyono

    (Bank Indonesia)

  • Amelia A. Hidayat

    (Bank Indonesia)

Abstract

This study investigates the role of servicification within Indonesia’s manufacturing sector, focusing on its impact on productivity, global value chain (GVC) participation, and regional diversity in servicification practices. Empirical results indicate that servicification is positively correlated with firm productivity, with a 10% increase in service intensity linked to approximately a 1% productivity boost. The study further explores the differential impact of servicification across regions, technological classifications, and firm sizes. It reveals that in regions such as Java and Sumatra, high-value-added sectors benefit more from service integration, while the Eastern of Indonesia (EoI)’s reliance on primary manufacturing highlights challenges due to skill gaps and resource constraints. Also, based on regional survey data, they reveal how the integration of services—such as logistics, R&D, and customer support—into manufacturing operations can drive productivity and increase the sector’s competitiveness. This analysis provides policy recommendations to optimize servicification, enhance GVC participation, and support the transition to a service-oriented manufacturing landscape.

Suggested Citation

  • MHA Ridhwan & Nurul Pratiwi & Sulistiyo K. Ardiyono & Amelia A. Hidayat, 2024. "Reviving The Manufacturing Industry Through Servicification Strategy: Evidence From Indonesian Microdata," Working Papers WP/03/2024, Bank Indonesia.
    • Handle: RePEc:idn:wpaper:wp032024
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    File URL: http://publication-bi.org/repec/idn/wpaper/WP032024.pdf
    File Function: First version, 2024
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    More about this item

    Keywords

    Servicification; Manufacturing Sector; Productivity; Global Value Chains; Digitalization;
    All these keywords.

    JEL classification:

    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance

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