SPEAKIN’ OUT NEWS
(L-R): Researchers UAH Associate Professor of Marketing Dr. Yongchuan (Kevin) Bao. and UAH Assistant Professor of Management Science Dr. Yi Tan. (Michael Mercier | UAH)
New research from The University of Alabama in Huntsville, a part of The University of Alabama System, challenges a long-held assumption in business: that offering services in a solution package strengthens relationships between manufacturers and their customers. In a study published in Production and Operations Management, UAH Associate Professor of Marketing Dr. Yongchuan (Kevin) Bao and Assistant Professor of Management Science Dr. Yi Tan, together with co-authors in the strategy field, reveal a counterintuitive outcome: expanded product offerings with services to solve clients’ operational problems may actually increase the likelihood of customer default, potentially undermining buyer–supplier relationships.
The research examines the unintended consequences of manufacturers shifting from selling standalone products to delivering integrated “customer solutions.” The work draws on a dataset of 2,218 observations from 446 publicly listed manufacturing firms between 2012 and 2020. While prior literature has emphasized the benefits of “servitization,” or bundling products with services, Bao, Tan and their co-authors identified a “dark side” to this strategy.