Servicification of Japanese Manufacturing Firms and Its Impact on Corporate Performance in the Export Market

This study revisit the impact of the servicification of Japanese manufacturing firms in terms of firm-level performance in export markets, using Japanese firm-level panel data set from 2009 to 2019. We constructed two measures of firm-level servificiation: in-house service production and bought-in service input, which is service input procured from external providers. We then examine its impact on corporate performance in export markets, measured by the Global Value Chain participation dummy, namely, the two-way trader dummy and the export intensity. Unlike previous studies, we examine various measures of service outsourcing and estimate the Correlated Random effects model, which enables us to control for unobserved individual fixed effects. We find that bought-in service input, especially service outsourcing, significantly impacts GVC participation and export intensity, and that this effect is more pronounced for high-tech industries.