Exploring the Impact of Servitization and Digitalization on Firm Competitiveness and Performance: The Moderating Role of Government Support

Abstract

In the rapidly evolving global business landscape, servitization and digitalization have emerged as key strategies for enhancing firm competitiveness and performance. This study examines their impact, along with the moderating role of government support, in the Indonesian shipping industry. Drawing on the resource-based view (RBV), servitization and digitalization are conceptualized as internal drivers of performance, while Resource Dependence Theory (RDT) positions government support as an external factor that reduces environmental uncertainty and strengthens these relationships. Using data from 345 shipping companies, analyzed through Partial Least Squares Structural Equation Modeling (PLS-SEM), the results show that both servitization and digitalization positively affect competitiveness and performance. Furthermore, government support significantly enhances these effects by providing resources such as infrastructure and financial incentives, facilitating the adoption of digital strategies and service-based models. Beyond firm outcomes, these transformations align with broader sustainability objectives by improving resource efficiency, reducing waste and delays, and potentially lowering the environmental footprint of logistics activities. This study advances theoretical understanding by demonstrating the central role of external resources—particularly government support—in enabling successful digital and service transformations. For policymakers, the findings emphasize the need for targeted incentives and infrastructure to accelerate industry-specific innovation and sustainability goals. For practitioners, they highlight the importance of aligning strategic initiatives with government policies to maximize the benefits of servitization and digitalization.

1. Introduction

In an era when entire industries can be reshaped overnight by evolving technologies and shifting market forces, businesses face previously unheard of opportunities and challenges [1]. To stay competitive, firms must explore innovative strategies that allow them to adapt to these shifts and maintain their market position. Among the most significant of these strategies are servitization and digitalization, which have emerged as powerful avenues for organizational transformation [2]. Servitization involves shifting from a product-centric to a service-oriented business model, while digitalization refers to integrating advanced technologies into business operations. Together, these transformations enable companies to unlock new value propositions and establish a sustainable competitive advantage in the global marketplace [3].

However, the implementation of these strategies requires significant organizational change. Companies must rethink their business models, restructure their operations, and adopt new value-driven strategies that align with evolving market needs [4]. This process necessitates an agile mindset and flexible frameworks that can manage the dynamic nature of business model evolution and organizational design [5]. Strategically integrating advanced digital technologies elevates efficiency, supports new services, reconfigures revenue mechanisms, and creates new market opportunities [6].

Servitization has gained significant attention as a strategic approach that enhances long-term customer relationships and creates new revenue streams. By providing integrated solutions that combine products and services, firms can increase customer satisfaction and loyalty, thus improving their competitive positioning [7,8]. This shift is particularly potent when complemented by digital technologies, which enable firms to become more data-driven, responsive to customer needs, and capable of developing innovative services that optimize existing offerings [9]. In combination, servitization and digitalization offer firms a powerful toolkit to foster differentiation, drive innovation, and build a more competitive edge in increasingly crowded markets.

Simultaneously, digitalization has become essential for firms that want to remain competitive in the global market. By adopting digital technologies, firms can improve internal processes, enhance decision-making, and create new business models. Digitalization enables firms to enhance operational efficiency, increase profitability, and develop innovative products and services [10]. Moreover, it empowers firms to build dynamic capabilities that foster agility, resilience, and the ability to adapt to rapidly changing market conditions [11,12]. Through digitalization firms achieve greater operational efficiency and deepen customer engagement, resulting in increased market share and competitive advantage [13,14].

The resource-based view (RBV) emphasizes that a firm’s internal resources and capabilities are key drivers of its competitive advantage [15]. In this study, digitalization and servitization are viewed as strategic capabilities that enhance a firm’s resource base, enabling it to build sustainable competitive advantages. For example, by adopting digital technologies, firms can enhance their data capabilities, which in turn improves their operational efficiency and customer engagement. Similarly, servitization enables firms to diversify their offerings and create new value propositions, which strengthen their competitive position and revenue streams.

Despite the growing adoption of these strategies, the relationship between digitalization, servitization, and firm performance remains a topic of debate. Previous research has produced mixed results, with some studies indicating a positive impact, while others suggest no significant effect. For instance, studies by Martín-Peña et al. [16], Moreno et al. [17], Queiroz et al. [18], and Martín-Peña et al. [19] argue that servitization positively impacts firm performance, while Zhou et al. [20] suggest that its effect is not significant. Similarly, Li et al. [21] find that digitalization has a significant positive impact on firm performance, but Guo et al. [22] argue that this relationship may be negative. These conflicting findings underline the need for further investigation, particularly within specific industry contexts like the shipping industry in Indonesia.

Although both servitization and digitalization hold immense potential, their successful implementation often depends on external factors, particularly government support. Resource Dependence Theory (RDT) suggests that firms depend on external resources, and their actions are influenced by the need to secure these resources from other organizations or stakeholders [23]. Government policies that promote innovation, provide digital infrastructure, and incentivize business transformation can significantly reduce the barriers that firms face when adopting these strategies. For instance, government subsidies for digital adoption and innovation can help alleviate the financial burdens of transformation, making it easier for firms to integrate new technologies and services [24]. Furthermore, active government support can enable firms to navigate the complexities of digital and service transformation, positioning them to achieve improved performance and enhanced competitiveness [25]

Indonesia’s shipping industry is strategically important given its role in national logistics and trade, yet its competitiveness has come under pressure in recent years. One key measure of the competitiveness and performance of shipping companies is the Logistics Performance Index (LPI), published by the World Bank. The LPI evaluates logistics infrastructure, customs efficiency, technology development, and supply chain reliability. A higher LPI score indicates better logistics efficiency, which in turn improves Indonesia’s position in the global market. As stated by the World Bank [26], Indonesia’s LPI has fluctuated significantly between 2007 and 2023, with a decline from 3.15 in 2018 to 3.0 in 2023, causing the country’s rank to drop from 46th to 63rd globally. These fluctuations highlight instability in Indonesia’s logistics performance, which can be attributed to challenges such as inadequate infrastructure, limited technological capabilities, and difficult geography. These issues undermine the global competitiveness of Indonesian shipping companies. Therefore, logistics digitalization should be elevated to a strategic priority to enhance global competitiveness. Digital systems can enhance tracking and monitoring, allowing companies to manage shipments more efficiently and provide real-time location updates and accurate delivery time estimates [27].

Given these discrepancies in the literature and the fluctuating performance reflected in the LPI, this study aims to explore how digitalization and servitization influence firm competitiveness and performance within the Indonesian shipping industry. Specifically, this research examine whether these factors have a significant effect on firm outcomes, addressing the conflicting results found in previous studies. By developing a comprehensive understanding of these relationships, the study can inform strategic decision-making, guide organizational design, and shape the future of competitive advantage in this evolving industry [9,28,29]. This research also aims to offer new perspectives on how firms can leverage these interactions to gain a competitive edge in an increasingly dynamic market landscape.

However, despite the promising potential of these strategies, firms often struggle with overcoming internal resistance to change, particularly in industries with legacy systems and traditional business practices. Government support thus becomes a critical moderating factor in helping firms adapt and thrive in this rapidly changing environment. As firms embrace servitization and digitalization, governments should provide policy frameworks and incentives that foster innovation and support effective implementation.

This study investigates the effects of servitization and digitalization on firm competitiveness and organizational performance. Furthermore, it examines the moderating role of government support in strengthening or weakening this relationship. By adding this moderating perspective, this study provides a more comprehensive understanding of how external institutional factors influence firm performance. This study adopts two theoretical perspectives. RBV is used as the primary theory to explain the direct effects of servitization and digitalization on organizational performance by emphasizing how valuable internal resources drive competitive advantage. Meanwhile, RDT complements RBV by explaining the moderating role of government support, which reflects organizations’ dependence on external resources. By discussing these factors, this study explains how companies can leverage transformation to gain competitive advantage, particularly in the Indonesian shipping industry. Understanding the role of government support in this context will offer valuable insights for firms and policymakers aiming to foster sustainable growth and enhance performance in the digital era.

2. Literature Review

2.1. Theoretical Framework

2.1.1. Resource-Based View

RBV theory was first introduced by Wernerfelt [30] in his article, “A Resource-Based View of the Firm”, which states that a company’s competitive advantage depends on its possession of resources and capabilities that are difficult for competitors to imitate. RBV is a strategic approach that emphasizes the importance of a company’s internal resources in achieving competitive advantage. These resources encompass tangible assets (e.g., physical facilities) and intangible assets (e.g., reputation, knowledge, innovation).

In this study, the use of the RBV emphasizes the utilization of the company’s internal resources: the implementation of servitization and digitalization strategies, as a foundation for creating sustainable competitive advantage. Servitization is understood as the internal capability to integrate value-added services into the products offered [19]. On the other hand, digitalization reflects the application of digital technology into operational activities and decision-making processes, which can increase efficiency, expand the internal knowledge base, and encourage innovation capacity [16]. Both approaches, as forms of internal resources and capabilities that can strengthen the company’s position in market competition, are in line with the RBV perspective.

2.1.2. Resource Dependence Theory

RDT explains that companies cannot be completely independent because they are also influenced by resources from their external environment [31]. This dependency influences organizational behavior in efforts to reduce risk and maintain sustainability [23]. Navigating environmental uncertainty entails managing interorganizational relationships with external parties, particularly suppliers, government, and business partners.

In this study, government support is positioned as a moderating factor, recognizing that external factors must be taken into account in determining how organizations access and utilize resources. From RDT perspective, government support, whether in the form of regulation, fiscal incentives, infrastructure development, or funding programs, acts as an external catalyst that can strengthen or weaken a firm’s internal strategic initiatives and overall performance [32]. By treating government support as a moderating construct, this study reflects the RDT principle that organizations navigate dependency and enhance stability by strategically engaging external stakeholders to secure sustainable competitiveness.

2.2. Hypothesis Development

2.2.1. Servitization on Firm Competitiveness

The shift from traditional product-centric business models to those that integrate services (servitization) is widely recognized for its potential to enhance firm competitiveness. The success of adopting servitization hinges on how well an organization aligns its internal capabilities with external market demands. This alignment often requires a flexible organizational structure capable of responding to changes in the business environment, particularly in rapidly evolving markets [18]. As organizations embrace this model, they must ensure their structure and processes are adaptable to meet new customer expectations and technological advancements, enabling them to deliver integrated product–service solutions.

From an RBV perspective, servitization enables firms to more effectively deploy existing resources, including human capital, technology, and operational capabilities. This strategic shift enhances the firm’s ability to deliver greater value, strengthens its competitive position by fostering deeper customer relationships, and differentiates its offerings from competitors [9]. The process of servitization enables companies to expand their value proposition, improving customer retention and creating new revenue streams, thereby enhancing their overall competitive edge.

However, while a substantial body of literature underscores the positive relationship between servitization and firm competitiveness [33,34,35], some studies have highlighted potential challenges. In particular, organizations rooted in traditional business models may encounter resistance when shifting to a service-oriented approach, especially if their existing structures and cultures are not aligned with this change [36]. Other studies suggest that the position of a firm within its industry’s value chain can significantly influence the success of servitization adoption, with firms holding a strong market position more likely to thrive in this transition [37]. Therefore, while the general view is that servitization fosters competitiveness, the outcomes are often contingent on industry context and the firm’s readiness for change.

Recent research has found the benefits of servitization by enhancing service delivery and facilitating real-time interactions with customers [35,38]. However, it is important to note that this integration is not always seamless. In this study, servitization is operationalized through three dimensions—service offering, resource base, and activity system—while the construct examined in this subsection is reflected in increased value creation, reduced costs, and non-financial assets.

H1: 

Servitization is associated with firm competitiveness.

2.2.2. Servitization on Firm Performance

Services are inherently intangible, highly customizable, and difficult to imitate or substitute, which makes the resources and capabilities required for effective servitization distinctive and valuable. Firms that successfully adopt servitization can leverage these resources to create an advantage that differentiates them in the marketplace [39]. Additionally, the inherent difficulty in replicating service-based offerings ensures that firms with a strong servitization strategy maintain an edge over others, as such advantages become harder to imitate [39].

There is growing research that supports the positive relationship between servitization and firm performance. Studies by Martín-Peña et al. [16], Moreno et al. [17] and Queiroz et al. [18] highlight how servitization enhances firm performance by enabling access to new revenue streams, improving customer satisfaction, and yielding favorable commercial outcomes. These studies show that servitization expands a firm’s capabilities and creates a differentiated value proposition, thereby enabling firms to deliver sustained results. In this context, servitization allows firms to evolve and better align their offerings with customer needs, ultimately driving growth and performance.

However, while the benefits of servitization seem evident, empirical evidence regarding its effectiveness is not always consistent. Zhou et al. [20] present a more cautious view, suggesting that servitization may not always result in significant improvements in firm performance. This divergence in findings indicates that the effects of servitization are contingent on contextual conditions, including industry characteristics, organizational readiness, and the environment in which firms operate. The success of servitization depends on how well a firm’s internal capabilities align with external environmental factors, including market demands, technological advancements, and regulatory conditions [40]. Firms that are more adaptable and responsive to these contextual factors are more likely to tailor their service offerings and operational strategies to the dynamic conditions they face, thereby realizing better results. In line with this subsection’s focus, firm performance is measured through financial performance (total sales, market share, profitability, return on investment) and customer service performance (high-quality service, services that exceed expectations, customer loyalty, new customers).

H2: 

Servitization is associated with firm performance.

2.2.3. Digitalization on Firm Competitiveness

The influence of digitalization on firm competitiveness has become a central concern in competitiveness research and practice. Initially viewed as a means to enhance operational efficiencies, digitalization now plays a far more transformative role in reshaping market dynamics and competitive landscapes. By improving efficiency, reducing operational costs, enhancing product quality, accelerating delivery times, and increasing convenience, digitalization offers firms a way to optimize existing business models [41]. However, with the rapid pace of technological advancement, digitalization has moved beyond these operational improvements, leading to fundamental shifts in market structures and competitive interactions [42].

In addition to optimizing current business processes, digitalization also facilitates the creation of more intricate digital ecosystems. These ecosystems are composed of diverse and complementary digital technologies that together generate value in new ways. The role of a firm within these ecosystems is significantly influenced by its ability to leverage its resources and digital capabilities, which in turn impacts its competitive position [43]. Firms that excel in navigating these ecosystems by integrating a variety of digital tools can create more robust value propositions, enhancing their competitiveness in the process.

Recent studies by Dabbous et al. [10], Zaragoza-Sáez et al. [44], and Liu et al. [45], provide strong evidence of the positive relationship between digitalization and firm competitiveness. These studies show that companies that strategically integrate digital technologies into their operations and business strategies experience significant competitive advantages. Digitalization helps companies streamline internal processes, improve customer interactions, drive innovation, and expand market reach through more responsive services. As a result, digitalized firms are better equipped to meet evolving customer demands, differentiate themselves from competitors, and secure a leading position in the market.

From the perspective of RBV, digitalization enables firms to build sustainable competitive advantage by leveraging their internal resources and capabilities, particularly in the digital domain [15]. By integrating advanced technologies such as IoT, AI, and big data analytics, firms optimize internal operations, develop distinctive digital capabilities that are difficult to replicate, and offer innovative products and services, thereby enhancing their competitive edge.

However, integrating digital technologies is not without challenges. Firms often face difficulties in incorporating new digital tools into their existing structures, which can lead to inefficiencies or missed opportunities. This issue is particularly evident in industries where the legacy infrastructure and organizational culture are not aligned with new digital technologies. The success of digitalization depends heavily on the alignment of internal processes with the external environment [40]. Firms that can successfully match their strategies and structures with technological advancements are more likely to succeed in leveraging digitalization. Conversely, firms that fail to adapt to these external technological shifts or whose internal processes are misaligned may struggle to fully realize the benefits of digital transformation. This dual perspective in the literature reflects both the promise and the challenges that digitalization brings to firms as they navigate the complexities of technological adoption. Given these varying viewpoints and the transformative nature of digitalization, this study posits the following hypothesis:

H3: 

Digitalization is associated with firm competitiveness.

2.2.4. Digitalization on Firm Performance

Digitalization holds the potential to significantly enhance firm performance by streamlining operations, improving efficiency, and fostering business growth [46]. In line with the RBV, research suggests a strong link between IT assets, organizational capabilities, and performance outcomes. The strategic use of digital resources is critical for firms seeking to create value and sustain competitive advantage [47]. Amit & Han [48] further highlight that value creation in the digital context is driven by the innovative allocation and arrangement of these resources, enabling firms to differentiate themselves in a rapidly changing business environment.

One of the key benefits of digitalization is its ability to reduce transaction and production costs, thereby increasing internal efficiency and optimizing organizational processes [49,50]. This, in turn, enables firms to allocate resources more effectively and respond to market demands with greater agility. Additionally, digitalization is closely linked to a firm’s ability to innovate, which directly enhances its overall performance. The adoption of digital technologies facilitates innovation by enabling firms to generate insights that lead to new products, services, or processes that drive performance improvements [42].

Moreover, digitalization influences human capital in addition to shaping technological capabilities. Digital tools, including IT systems and big data analytics, have been found to support the development of skills within organizations, linking technological advancements to improvements in human resources and leadership, thus further boosting performance [51,52]. The ability to effectively integrate digital tools with human talent strengthens a firm’s overall performance by fostering better decision-making and more efficient operations.

Empirical evidence by Li et al. [21] and Martín-Peña et al. [19], supports the positive relationship between digitalization and firm performance. These studies demonstrate that firms leveraging digital technologies experience significant performance improvements across various metrics, including profitability, operational efficiency, and customer satisfaction. However, not all research concurs with these findings. Guo et al. [22] argue that the relationship between digitalization and firm performance can be negative, pointing to challenges in implementation and the context-specific factors that may hinder the anticipated benefits of digital transformation. These conflicting results underscore the complexity of digitalization and its context-dependent outcomes.

The success of digitalization in enhancing firm performance is highly dependent on the alignment between a firm’s internal capabilities and the external environment. This emphasizes that firms must adapt their strategies and structures to the ever-changing market and technological conditions [40]. In this regard, firms that align their digitalization strategies with market trends, regulatory changes, and technological advancements are more likely to benefit from digitalization. Conversely, firms that fail to align their strategies with external conditions may face challenges in fully capitalizing on the potential of digital technologies. For example, firms in industries with low technological maturity or those facing regulatory restrictions may struggle to achieve the expected improvements in performance, even with digital technologies in place. To further investigate this dynamic, the following hypothesis is proposed:

H4: 

Digitalization is associated with firm performance.

2.2.5. Firm Competitiveness on Firm Performance

Firm competitiveness is widely regarded as a key determinant of corporate success and is positively associated with firm performance. By developing advantages in leadership, rapid innovation, superior product quality, reliability, and shorter delivery times, firms can improve overall performance [53]. A positive and significant relationship between competitiveness and performance is reported by Cantele and Cassia [54], Abeysekara et al. [55], and Khan et al. [56]. Firms that invest in core competencies, including innovation, strategic alignment, and the effective use of tangible and intangible assets, tend to realize gains in operational efficiency and financial performance. A competitive edge in areas like product innovation or cost efficiency allows firms to outperform their rivals, leading to enhanced financial success and long-term growth.

However, while the connection between competitiveness and performance is generally acknowledged in the literature, the extent of this relationship can vary across different industries. In highly saturated markets or those characterized by intense price competition, basic competitive advantages like pricing or delivery speed may not be sufficient to secure sustained performance gains. In such environments, firms should prioritize differentiation through distinctive value propositions and loyalty-building strategies to sustain competitiveness and performance. The central challenge is to convert competitive strengths into outcomes that preserve market share, enhance profitability, and support long-term success.

The success of firm competitiveness in driving firm performance depends on how well a firm adapts its internal capabilities to external market conditions. Consistent with this perspective, the effectiveness of competitive strategies is contingent on aligning a firm’s resources, capabilities, and strategy with shifts in market trends, customer preferences, and technology [40]. Firms that successfully adapt to these dynamic external factors are more likely to enhance their competitive advantages and, in turn, improve their overall performance.

While prior studies support the relationship from competitiveness to performance [53,54,55,56], strong results may also strengthen a firm’s later position by creating additional resources, improving reputation, building scale and learning, and attracting partners and skilled employees. Over time, these effects can raise value creation, improve cost position, and build non-financial assets. In line with the view that outcomes depend on the fit between internal capabilities and external conditions [40], a two-way relationship is possible. Even so, to keep the model simple and because the data are cross-sectional, this study tests only the direction from competitiveness to performance and leaves the reverse direction for future research. Given the complexities surrounding the relationship between competitiveness and performance, this study proposes the following hypothesis:

H5: 

Firm competitiveness is associated with firm performance.

2.2.6. Government Support as a Moderating Variable

Government support plays a pivotal role in shaping the strategies that firms adopt, particularly in the areas of servitization and digitalization, by providing resources, policies, and incentives that help organizations overcome challenges and maximize their strategic initiatives. Government support, in the form of financial incentives, policy frameworks, and infrastructure development, has become a critical enabler for firms seeking to innovate and transform their operations [57,58]. This support helps organizations align with regulatory expectations, secure resources and develop the capabilities necessary for growth. According to RDT, firms often rely on external resources, such as government support, to navigate environmental uncertainties and bolster their internal strategies [23].

In the context of servitization, government support moderates the association between servitization strategy and firm performance by lowering adoption frictions and enabling capability development [58]. By easing transaction costs and risk and by improving the environment for service-oriented strategies, such support strengthens the effect of servitization on firm performance. For digitalization, government support has similar moderating implications. Policies and infrastructure that enable technology adoption and skill formation enhance firms’ ability to implement digital solutions effectively, which magnifies the positive association with firm performance. Empirical work reports better outcomes where digital projects receive governmental support [19].

In addition, government support can assist firms in addressing common digital-transformation challenges: high technology costs, shortages of skilled digital labor, and market uncertainty. By offering funding, creating favorable policies, or ensuring the availability of necessary infrastructure (for example high-speed internet or data centers), governments enable firms to adopt and integrate advanced digital technologies more effectively. This reduces the barriers to digitalization and accelerates the process of leveraging technology for competitive advantage.

A growing literature indicates that public policy instruments are associated with greater adoption and intensity of service-oriented strategies and with accelerated digital transformation. For servitization, fiscal incentives, innovation grants, financing facilitation, participation in government-led projects, and supportive policy environments reduce coordination and investment frictions and strengthen service capabilities, making integrated product–service offerings more feasible [58]. For digitalization, investments in ICT infrastructure, data and process standardization, digital skills programs, and access to platforms and pilot initiatives speed technology integration and its use in processes and services, which is associated with gains in efficiency and innovation [19,58]. Theoretically, these mechanisms align with RDT, where external support helps firms manage uncertainty and access scarce inputs [23].

H6a: 

Government support moderates the effect of servitization on firm performance.

H6b: 

Government support moderates the effect of digitalization on firm performance.

The hypothesis model is illustrated in Figure 1 below.

To maintain a simple, well-identified specification given the cross-sectional nature of the data, the model estimates direct effects and one theorized moderator (government support) and does not test mediating pathways. Theoretically plausible mediators are acknowledged as avenues for future research.

3. Methods

This study aims to examine the influence of servitization and digitalization on firm competitiveness and performance, with government support as a moderating variable. A quantitative and explanatory research design is used in this research [59].

3.1. Population and Sample

This study focuses on the shipping companies in Indonesia that are registered as SIUPAL holders, with a population size of 2462 firms as of January 2025. The unit of analysis is the shipping company, and the population is considered homogeneous due to the uniform regulatory framework governing these companies under SIUPAL. The study uses purposive sampling to ensure that the sample represents companies with relevant characteristics. The criteria for inclusion are: (1) companies that operate a minimum of 25 ships, ensuring operational scale, (2) companies that have been in operation for at least five years, ensuring sufficient stability and experience, and (3) companies providing domestic or international services. Based on these criteria, 345 companies were identified, resulting in a sample size of n = 345 firms. The use of purposive sampling ensures that the selected companies meet specific criteria but it also limit the generalizability of the findings. Companies with smaller operational scales or newer market entrants are excluded, potentially overlooking different patterns that exist outside these criteria.

Data were collected using a structured questionnaire administered via Google Forms to one key informant per company (operations director, general manager, or operations manager). These roles were selected because of direct oversight of service delivery and digital initiatives and access to firm-level performance and policy information relevant to the study variables. Most respondents had multi-year tenure and coordinated across operations, finance, and compliance, providing a holistic view of servitization, digitalization, competitiveness, and performance. Responsibilities also include supervising the implementation of digital systems and interacting with regulators and port authorities on licensing and incentive programs, which supports accurate reporting of government support. It is important to note that while individual managers completed the survey, the unit of analysis remained the shipping company, with each company providing one respondent to represent organizational-level data.

Given the firm-level unit of analysis, one knowledgeable managerial informant (operations director, general manager, or operations manager) reported on organization-wide constructs. Key-informant designs are widely used when reliable, comparable archival indicators are unavailable across firms. All variables were measured using validated multi-dimensional scales, with items capturing firm-level practices, capabilities, external support, and outcomes as assessed by a knowledgeable managerial informant.

Regarding the response rate, all 345 invited companies provided a single response, resulting in a 100% response rate. To ensure high-quality and reliable data, the survey was conducted using a single-blind approach, where the researcher knew the identity of the respondents, but respondents did not know the researcher’s identity. This approach helps reduce potential bias and encourages more objective responses.

The survey link, along with a detailed explanation of the study’s goals, instructions, and confidentiality assurances, was sent via email and direct messaging to the selected companies. Respondents were given two weeks to complete the survey, with periodic reminders sent to ensure a high response rate. Additionally, direct support was offered if necessary, to help respondents complete the questionnaire. This approach ensured that the data collected was both representative and reliable, reflecting the perspectives of individuals responsible for strategic decisions within the shipping companies.

3.2. Variables Measurement

This study evaluates six key variables for understanding the effects of strategic transformations in firms. The variables are measured using a 5-point Likert scale, where respondents were asked to rate their level of agreement with statements, with response options ranging from 1 (strongly disagree) to 5 (strongly agree). This scale is widely used in social science research to capture the intensity of respondents’ attitudes and perceptions with sufficient granularity [60].

Servitization refers to the transformation of business strategies to adopt a service-oriented approach [39]. It is assessed using three components: service offering, resource base, and activity system [61]. These components represent how service-based strategies integrate with core business activities, resource management, and operational processes. For this study, the measurement was adapted to the shipping industry, incorporating industry-specific services such as vessel maintenance, logistics consulting, and customer support.

Digitalization refers to the integration of advanced Industry 4.0 technologies into business operations [62]. It is measured using three key indicators: cultural change, collaboration with forwarders, and digital integration. These indicators evaluate how companies adopt digital technologies, collaborate with external partners, and integrate digital tools across departments. For this study, the measurement was adjusted to the context of the Indonesian shipping sector, with specific attention to technologies like real-time cargo tracking systems and cloud-based operational platforms.

Government support refers to the perception of managers regarding the level of assistance provided by government institutions in supporting business activities [63]. It is assessed using a framework adapted from Shu et al. [58] and Zulu-Chisanga et al. [63] comprising four components: technology and information support, financial facilitation, policy and project support, and direct incentives and subsidies. These dimensions reflect the various types of government interventions that assist firms in adopting service-based business models and digital technologies. In this research, it has been specifically adapted to the Indonesian regulatory environment and the government’s incentives for the shipping industry.

Firm competitiveness is defined as a company’s ability to maintain a strong market position [64]. It is evaluated using three indicators: value creation, cost reduction, and non-financial assets. These indicators assess how well a firm can innovate, optimize its resources, and leverage intangible assets to improve its market position. In this study, it has been adapted to the shipping industry, considering elements like customer loyalty and operational flexibility in logistics.

Finally, firm performance is measured through two key indicators: financial performance and customer service performance [65]. Financial performance includes measures like profitability and market share, while customer service performance evaluates the company’s ability to meet customer needs through service quality and satisfaction. For this research, the performance metrics were adapted to the shipping industry by incorporating specific variables like operational efficiency, cargo delivery times, and customer satisfaction in logistics services. A summary of the constructs and their indicators is provided in

Table 1. Variable measurement.

Variable	Indicators	Items	Sources
Servitization (X1)	Service offering (X1.1)	(1) Specific customer needs (2) Competitive advantage (3) Prioritizing customer satisfaction	Ayala et al. [61]
	Resource base (X1.2)	(1) New competencies (2) Individual expertise (3) High flexibility
	Activity system (X1.3)	(1) Functional area innovation (2) Customer solution development (3) Internal synergy support
Digitalization (X2)	Cultural change (X2.1)	(1) Continuous learning (2) Digital skills training (3) Digitalization innovation	Ichimura et al. [62]
	Collaboration with forwarders (X2.2)	(1) Operational data sharing (2) Strategic collaboration on new technologies (3) Digital technology collaboration
	Digital integration (X2.3)	(1) IoT system integration (2) Integration across all departments (3) Digital technology investment
Government Support (X3)	Technology Information Support (X3.1)	(1) Information technology (2) Technology support (3) Access to new technology training	Shu et al. [58] and Zulu-Chisanga et al. [63]
	Financial Facilitation Support (X3.2)	(1) Financial resources (2) Access to financing (3) Financial training
	Policy and Project Support (X3.3)	(1) Business support policies (2) Project involvement (3) Conducive environment
	Direct Incentive and Subsidy Support (X3.4)	(1) Tax incentives (2) Direct subsidies (3) Grants or funding schemes
Firm Competitiveness (Y1)	Increased value creation (Y1.1)	(1) New market opportunities (2) Innovative strategies (3) First mover (4) Entering new markets	Hermundsdottir and Aspelund [64]
	Reduced costs (Y1.2)	(1) Operational cost efficiency (2) Work productivity (3) Efficiency strategies
	Non-financial assets (Y1.3)	(1) Positive reputation (2) Differentiated brand image (3) High customer satisfaction
Firm Performance (Y2)	Financial performance (Y2.1)	(1) Total company sales (2) Company market share (3) Company profitability (4) Company return on investment	Lin et al. [65]
	Customer service performance (Y2.2)	(1) High-quality service (2) Service exceeding customer expectations (3) Customer loyalty (4) New customers

.

To ensure the validity and reliability of these measurement instruments, pretesting was conducted with a pilot sample of 30 respondents from the target population [66]. This pretest helped identify any ambiguities in the questions and ensured that the Likert scale functioned as intended. Based on feedback, minor revisions were made to improve clarity.

Common method bias (CMB) was also addressed, given that data were collected using a single survey method. To assess CMB, Harman’s Single Factor Test was applied, and results indicated that no single factor explained the majority of the variance, suggesting that CMB was not a significant concern in this study. Additionally, the survey used a single-blind approach, where respondents were unaware of the researcher’s identity, reducing potential biases in responses. Each measurement instrument used in this study has been adapted from established frameworks and validated through previous research [67], ensuring their relevance and robustness in the context of the Indonesian shipping industry.

3.3. Data Analysis Method

This study employs Partial Least Squares Structural Equation Modeling (PLS-SEM) to test the research hypotheses. PLS-SEM is particularly suitable for this research because it allows for the simultaneous examination of complex relationships between multiple variables, while assessing both direct and indirect effects [68]. The method is ideal for modeling latent variables and their indicators, providing a robust framework for analyzing the relationships among servitization, digitalization, firm competitiveness, government support, and firm performance.

The data analysis is conducted using SmartPLS 3.2.8, a widely recognized software for SEM analysis. SmartPLS is chosen for several reasons: (1) it supports one-way causality and is compatible with recursive models, (2) it allows the use of both reflective and formative measurement models for latent variables, and (3) it can analyze moderating effects and higher-order constructs. These features make SmartPLS 3.2.8 particularly suitable for testing the hypothesized relationships in this study, as it is capable of handling complex models that involve multiple levels of analysis.

The analysis process begins with the evaluation of the measurement model to assess the reliability and validity of the constructs. This includes examining the convergent validity, discriminant validity, and composite reliability (CR). In this study, convergent validity is considered adequate if the Average Variance Extracted (AVE) is greater than 0.5 and CR is greater than 0.7. Once the measurement model meets the necessary validity criteria, the structural model is tested. This step examines the relationships between the constructs, including direct effects, indirect effects, and moderating effects.

In addition, fit indices are reviewed to assess the overall model fit. Key fit indices for the measurement and structural models include AVE > 0.5, CR > 0.7, and Q² > 0, which are critical thresholds to confirm the robustness and predictive relevance of the model [69]. These indices help to ensure that the proposed model adequately represents the data and reflects the hypothesized relationships in the study.

4. Results

This study employs a higher-order construct approach, allowing for the modeling of a construct at a more abstract level (higher-order component/HOC) as well as its more specific subdimensions (lower-order component/LOC). The higher-order construct method used in this research is the embedded two-stage approach. In the first stage, the standard repeated indicators technique is applied, where all items from the lower-order components are associated with the higher-order component. The primary focus of this stage is to evaluate the measurement model at the indicator level. In the second stage, the construct scores obtained are used as indicators in the measurement model of the higher-order construct. This stage aims to assess the structural measurement model and evaluate the overall model fit in this study.

4.1. Stage 1

The reliability and validity metrics for the LOCs are summarized in

Table 2. Measurement Model Stage 1.

Variable	Indicators	Items	Loadings	CA	CR	AVE
Servitization (X1)	Service offering (X1.1)	X1.1.1	0.897	0.884	0.928	0.812
		X1.1.2	0.901
		X1.1.3	0.905
	Resource base (X1.2)	X1.2.1	0.897	0.882	0.927	0.809
		X1.2.2	0.899
		X1.2.3	0.901
	Activity system (X1.3)	X1.3.1	0.872	0.862	0.916	0.783
		X1.3.2	0.889
		X1.3.3	0.893
Digitalization (X2)	Cultural change (X2.1)	X2.1.1	0.897	0.863	0.916	0.785
		X2.1.2	0.895
		X2.1.3	0.884
	Collaboration with forwarders (X2.2)	X2.2.1	0.880	0.849	0.908	0.767
		X2.2.2	0.872
		X2.2.3	0.876
	Digital integration (X2.3)	X2.3.1	0.889	0.865	0.918	0.788
		X2.3.2	0.868
		X2.3.3	0.906
Government Support (X3)	Technology Information Support (X3.1)	X3.1.1	0.930	0.926	0.953	0.871
		X3.1.2	0.935
		X3.1.3	0.936
	Financial Facilitation Support (X3.2)	X3.2.1	0.935	0.928	0.954	0.873
		X3.2.2	0.944
		X3.2.3	0.925
	Policy and Project Support (X3.3)	X3.3.1	0.935	0.924	0.952	0.868
		X3.3.2	0.927
		X3.3.3	0.933
	Direct Incentive and Subsidy Support (X3.4)	X3.4.1	0.939	0.931	0.956	0.879
		X3.4.2	0.939
		X3.4.3	0.934
Firm Competitiveness (Y1)	Increased value creation (Y1.1)	Y1.1.1	0.741	0.745	0.839	0.567
		Y1.1.2	0.761
		Y1.1.3	0.734
		Y1.1.4	0.775
	Reduced costs (Y1.2)	Y1.2.1	0.784	0.816	0.860	0.682
		Y1.2.2	0.969
		Y1.2.3	0.874
	Non-financial assets (Y1.3)	Y1.3.1	0.773	0.705	0.813	0.593
		Y1.3.2	0.715
		Y1.3.3	0.818
Firm Performance (Y2)	Financial performance (Y2.1)	Y2.1.1	0.755	0.795	0.867	0.619
		Y2.1.2	0.782
		Y2.1.3	0.799
		Y2.1.4	0.811
	Customer service performance (Y2.2)	Y2.2.1	0.818	0.806	0.873	0.632
		Y2.2.2	0.785
		Y2.2.3	0.786
		Y2.2.4	0.791

.

The findings of the measurement model evaluation in stage 1 show that all items have factor loadings over 0.70, satisfying the threshold for indication reliability. Additionally, all constructs have CA and CR values greater than 0.70, guaranteeing internal consistency reliability. Each construct’s AVE score is likewise over 0.50, indicating that the constructs satisfy the requirements for convergent validity [69]. As a result, the measurement model meets the conditions for convergent validity and reliability. Next, the heterotrait–monotrait ratio of correlations (HTMT) criterion is used to evaluate discriminant validity.

Table 3. HTMT Stage 1.

	X1.1	X1.2	X1.3	X2.1	X2.2	X2.3	X3.1	X3.2	X3.3	X3.4	Y1.1	Y1.2	Y1.3	Y2.1
X1.2	0.889
X1.3	0.876	0.813
X2.1	0.054	0.087	0.066
X2.2	0.057	0.059	0.058	0.812
X2.3	0.051	0.061	0.068	0.798	0.809
X3.1	0.042	0.047	0.040	0.042	0.058	0.052
X3.2	0.029	0.033	0.028	0.025	0.053	0.052	0.890
X3.3	0.036	0.039	0.043	0.018	0.064	0.060	0.805	0.805
X3.4	0.052	0.046	0.037	0.025	0.052	0.048	0.795	0.795	0.894
Y1.1	0.413	0.414	0.392	0.366	0.356	0.406	0.179	0.151	0.178	0.187
Y1.2	0.176	0.125	0.166	0.047	0.046	0.042	0.026	0.029	0.031	0.023	0.087
Y1.3	0.422	0.485	0.454	0.431	0.445	0.413	0.188	0.156	0.179	0.174	0.853	0.067
Y2.1	0.214	0.201	0.222	0.264	0.224	0.212	0.723	0.720	0.703	0.720	0.568	0.094	0.676
Y2.2	0.209	0.194	0.208	0.217	0.163	0.160	0.760	0.744	0.746	0.746	0.515	0.060	0.588	0.801

, which shows the discriminant validity evaluation across all constructs, displays the results for HTMT in stage 1.

All build pairs had HTMT values below the 0.90 limit, as Table 3 demonstrates. This indicates that discriminant validity has been achieved since each construct in the model is distinct [70]. Consequently, Stage 2 can now start.

4.2. Stage 2

Similarly to Stage 1, Stage 2 begins with an assessment of the measurement model using factor loadings, CA, CR, and AVE.

Table 4. Measurement Model Stage 2.

Variable	Indicators	Loading	Cronbach’s Alpha	Composite Reliability	AVE
Servitization (X1)	Service offering (X1.1)	0.955	0.955	0.971	0.918
	Resource base (X1.2)	0.960
	Activity system (X1.3)	0.959
Digitalization (X2)	Cultural change (X2.1)	0.955	0.951	0.968	0.910
	Collaboration with forwarders (X2.2)	0.953
	Digital integration (X2.3)	0.953
Government Support (X3)	Technology Information Support (X3.1)	0.973	0.981	0.986	0.945
	Financial Facilitation Support (X3.2)	0.973
	Policy and Project Support (X3.3)	0.973
	Direct Incentive and Subsidy Support (X3.4)	0.970
Firm Competitiveness (Y1)	Increased value creation (Y1.1)	0.911	0.807	0.737	0.658
	Reduced costs (Y1.2)	0.904
	Non-financial assets (Y1.3)	0.912
Firm Performance (Y2)	Financial performance (Y2.1)	0.949	0.891	0.948	0.901
	Customer service performance (Y2.2)	0.949

displays the results of the evaluation of the Stage 2 measurement model.

All indicators have factor loadings greater than 0.70, according to the results of the measurement model evaluation in stage 2, meeting the variable reliability. Internal consistency reliability is further ensured by the fact that all constructs have CA and CR values higher than 0.70. The AVE score for each construct is also more than 0.50, suggesting that the constructs meet the convergent validity requirements [69]. Consequently, the measurement model satisfies the requirements for reliability and convergent validity. Next, discriminant validity is assessed using the HTMT criterion. The results for HTMT at stage 2 are shown in

Table 5. HTMT Stage 2.

	X1	X2	X3	Y1	Y2
X1
X2	0.050
X3	0.043	0.021
Y1	0.564	0.457	0.200
Y2	0.207	0.206	0.733	0.667

.

All of the structures have HTMT values below the predetermined threshold. Consequently, it can be said that every variable satisfies the requirements for discriminant validity and is suitable for more research.

Assessing the structural model comes after the measurement model has been verified. This entails evaluating model fit, multicollinearity, and the importance of path coefficients. The results of the hypothesis test, including path coefficients, p-values, and model fit indices such VIF, f2, R2, and Q2, are shown in

Table 6. Hypothesis Testing.

Hypothesis	Path Coefficient	p-Value	Result	VIF	f2	R2	Q2
H1: Servitization → Firm Competitiveness	0.391	0.000	Supported	1.012	0.144	0.506	0.516
H2: Servitization → Firm Performance	0.089	0.013	Supported	1.321	0.334	0.662	0.449
H3: Digitalization → Firm Competitiveness	0.380	0.000	Supported	1.003	0.262
H4: Digitalization → Firm Performance	0.102	0.004	Supported	1.294	0.218
H5: Firm Competitiveness → Firm Performance	0.284	0.000	Supported	2.023	0.171
H6a: Servitization * Government Support → Firm Performance	0.070	0.021	Supported	1.000	0.291
H6b: Digitalization * Government Support → Firm Performance	0.100	0.002	Supported	1.000	0.305

Notes: “*” indicates the moderation effect of Government Support.

.

The assessment of the structural model began with addressing potential multicollinearity to ensure that the predictors for the dependent variables were not excessively correlated. Based on the results in Table 6, the Variance Inflation Factor (VIF) values ranged from 1.000 to 2.023, all well below the critical threshold of 3.3, indicating that multicollinearity is not a concern in this study [71].

Next, the explanatory power of the predictors was evaluated using the coefficient of determination (R²). The R² values for firm competitiveness and firm performance were 0.506 and 0.662, respectively. According to Sarstedt et al. [68], R² values of 0.75, 0.50, and 0.25 indicate strong, moderate, and weak explanatory power. Based on these benchmarks, both firm competitiveness and firm performance demonstrated moderate explanatory power, as their R² values fall within the moderate range.

To assess the effect size (f²), which measures the impact of each predictor on the dependent variables, the study adhered to guidelines from Hair et al. [69]. f² values of 0.02, 0.15, and 0.35 indicate small, medium, and large effects, respectively. The results showed that servitization had a medium effect on both firm competitiveness (f² = 0.144) and firm performance (f² = 0.334). Digitalization had a large effect on firm competitiveness (f² = 0.262) and a medium effect on firm performance (f² = 0.218). Firm competitiveness had a medium effect on firm performance (f² = 0.171). Finally, the interaction between government support and servitization on firm performance had a medium effect (f² = 0.291), and similarly, the interaction between government support and digitalization on firm performance also showed a medium effect (f² = 0.305).

The predictive relevance of the model was assessed using the cross-validated redundancy measure (Q²), where a Q² value greater than zero indicates predictive relevance [71]. The Q² values for firm competitiveness and firm performance were 0.516 and 0.449, respectively, indicating medium to high predictive relevance for both constructs.

The structural relationships were tested using the bootstrapping method with 1000 resamples [72]. The results revealed that all hypothesized relationships were significant. Specifically, servitization significantly influenced both firm competitiveness (β = 0.391, p < 0.001) and firm performance (β = 0.089, p = 0.013). Digitalization had a significant effect on firm competitiveness (β = 0.380, p < 0.001) and firm performance (β = 0.102, p = 0.004). Additionally, firm competitiveness significantly influenced firm performance (β = 0.284, p < 0.001).

Furthermore, the moderating effects of government support were tested. The interaction between servitization and government support significantly influenced firm performance (β = 0.070, p = 0.021), and the interaction between digitalization and government support also significantly impacted firm performance (β = 0.100, p = 0.002). These results highlight the role of government support in enhancing the effects of servitization and digitalization on firm performance.

Overall, the findings emphasize the significant roles of servitization and digitalization in driving both firm competitiveness and firm performance. Additionally, the moderating role of government support further amplifies these effects, demonstrating its key influence in shaping firm success in today’s competitive environment. The structural model and hypothesis-testing results are summarized in Figure 2.

5. Discussion

5.1. The Effect of Servitization on Firm Competitiveness and Firm Performance

The findings from this study reveal that servitization has a significant and positive impact on both firm competitiveness and firm performance, which aligns with prior research highlighting the strategic benefits of adopting a service-oriented business model [34,37,73]. By integrating services with products, companies develop unique value propositions that enhance customer satisfaction and build sustainable competitive advantages.

These results underscore that the effectiveness of servitization is contingent upon the alignment between the company’s internal resources and the external environment [18]. In shipping industries, where market demands and technological advancements are constantly evolving, companies that embrace servitization often have more flexible and responsive organizational structures, which enable them to adapt quickly to market changes. This adaptability provides an advantage as businesses can innovate their service offerings, aligning them with customer expectations and technological trends.

Additionally, the RBV supports these findings by emphasizing that servitization enables firms to optimize their existing resources, capabilities, and competencies [9]. In the shipping industry, offering vessel maintenance, crew training, and logistics consulting alongside core products allows firms to capitalize on unique resources and deepen customer loyalty. This differentiation reinforces the firm’s position, improves operational effectiveness, and supports long-term financial stability.

The results also indicate servitization contributes positively to firm performance by improving financial and customer-service outcomes in shipping, consistent with prior evidence [16,17,18]. On the financial side, bundling services with core offerings can stabilize and grow revenue, lift profitability through higher utilization and better yield management, and support more predictable cash flows. On the customer-service side, dedicated service contracts and solution support are linked with better on-time delivery, shorter turnaround, and higher satisfaction, which align with the performance indicators used in this study. These mechanisms are consistent with the notion that service integration increases switching costs, enables cross-selling, and improves information flows between carriers and clients, which together improve results at the firm level.

At the same time, performance gains are not automatic. As noted in the literature, outcomes can be weaker when service expansion outpaces capability development or when organizational structures remain product-centric [20]. Added service variety may raise coordination costs, increase cost-to-serve, or dilute margins if pricing and process design are not aligned. From a contingency perspective, realization of performance benefits depends on the fit between internal capabilities and external conditions, including customer requirements, technology readiness, and regulatory settings [40]. In practice, this implies possible threshold or diminishing-returns effects: beyond a certain intensity, additional services may add complexity faster than value unless supported by processes, skills, and digital infrastructure.

In the Indonesian context, constraints such as uneven infrastructure, regional logistics bottlenecks, and regulatory hurdles can shape the extent to which servitization translates into measurable performance improvements [74,75]. Firms that calibrate the scope of their service portfolios to local operating conditions, while investing in workforce skills and interoperable digital systems, are more likely to convert servitization into better financial and customer-service results. These considerations complement the competitiveness findings above and motivate the policy discussion in Section 5.4.

5.2. The Effect of Digitalization on Firm Competitiveness and Firm Performance

The results of this study indicate that digitalization has a significant positive effect on both firm competitiveness and firm performance. As companies adopt digital technologies, they operate more efficiently and strengthen their position in a rapidly evolving marketplace. This is consistent with prior research arguing that digitalization improves operational efficiency and reinforces firms’ standing in an increasingly digital world [44,45].

From a resource-based view, the findings support the idea that digitalization builds advantages by enabling firms to leverage technology-based resources [43]. Integrating the Internet of Things, artificial intelligence, big data analytics, and cloud computing streamlines operations, improves decision-making, and supports new value propositions that fit contemporary customer needs. In shipping, the use of real-time cargo tracking and AI-based route optimization has been shown to increase operational efficiency, reduce costs, and shorten delivery times, outcomes that underpin stronger positions relative to rivals [75].

The SEM analysis confirms that the three indicators of digitalization, namely cultural change, collaboration with forwarders, and digital integration, capture the transformation process used in this study. Cultural change, reflected in continuous learning, digital skills training, and innovation, supports adoption readiness. Collaboration with forwarders through data sharing, joint work on new technologies, and digital partnerships facilitates process optimization across the chain. Digital integration, including IoT system integration, cross-departmental integration, and sustained investment, indicates that technology use must be coordinated across functions to deliver efficiency, cost reductions, and added value.

Digitalization strengthens firm competitiveness as defined in this study, that is value creation, cost reduction, and non-financial assets. First, value creation increases when real-time visibility and analytics enable more reliable schedules, tailored services, and broader solution scope that differentiate offerings in the market [10,44,45,75]. Second, cost reduction improves through process automation, better asset utilization, and data-driven planning that shorten turnaround and lower operating expenses [75]. Third, non-financial assets such as reputation and customer satisfaction are reinforced by greater information transparency, faster response, and more consistent service quality supported by collaboration with forwarders and organization-wide digital integration [10,44,45]. Together, these mechanisms explicitly raise the components of firm competitiveness employed in this research.

Digitalization is also associated with better results on the performance dimensions used in this study. Internally, automation and data-driven decision-making raise efficiency and lower operating costs. Externally, digital service platforms, AI-enabled customer service, and secure electronic payments support faster response and greater service reliability, which are reflected in higher customer satisfaction and retention [9]. In shipping, firms that adopt real-time tracking, AI-based routing, and digital customer service typically report faster delivery, fewer delays, and improved flexibility in meeting demand, mapping directly to the financial and customer-service indicators summarized in this study [75].

Finally, the magnitude of digitalization effects varies across regions. Differences in ICT connectivity, port community systems, and power reliability shape how deeply firms can embed digital tools. In high-readiness locations, deeper integration yields better schedule reliability, greater responsiveness, and a broader service scope, reinforcing firm competitiveness [10,44,45,75]. The same conditions are associated with larger performance gains through efficiency improvements, faster delivery, and higher customer satisfaction, which align with the performance indicators used in this study [76,77]. Where infrastructure is limited, integration costs and disruptions dampen both competitiveness and performance effects unless supported by phased deployment, complementary capability building, and locally adapted operating arrangements. These regional disparities clarify how infrastructure readiness conditions the effectiveness of digitalization for both firm competitiveness and firm performance.

5.3. The Effect of Firm Competitiveness on Firm Performance

The results of this study reveal a significant and positive relationship between firm competitiveness and firm performance, indicating that the higher the level of competitiveness within a firm, the better its business performance. This finding aligns with existing literature that underscores the importance of sustained competitive advantage in enhancing operational efficiency, strengthening customer satisfaction, and expanding market share—all of which contribute positively to firm performance [53,54,78].

The results emphasize that the effectiveness of competitiveness in improving business performance is highly contingent on the alignment between a firm’s business strategy and both external and internal factors [40]. In industries that are becoming increasingly competitive and digitalized, firms that can adjust their competitive strategies to market trends, regulatory changes, and technological developments are better positioned to maintain their competitive edge. For example, firms that adopt continuous innovation strategies, operational automation, and efficient supply chain management are more likely to improve cost efficiency, accelerate market responses, and enhance customer satisfaction, all of which contribute to firm performance [78].

Moreover, according to RBV theory, competitive advantage stems from unique capabilities and resources within a firm that are difficult for competitors to imitate [15]. The findings of this study further support the RBV perspective by demonstrating that firms that successfully leverage their strategic capabilities, product innovation, operational efficiency, and superior service quality tend to enjoy higher competitive advantage, which, in turn, drives long-term improvements in Firm Performance [79]. Competitive advantages grounded in strong internal resources enable firms to optimize operational efficiency, accelerate innovation, and strengthen relationships with customers and business partners.

Furthermore, a strong competitive position enables firms to build higher customer loyalty and create added value for stakeholders. In the shipping industry, for instance, firms that can offer more efficient logistics services, adopt IoT-based cargo tracking systems, and ensure high reliability in deliveries will outperform their competitors. This competitive advantage improves operational efficiency, builds customer trust, expands business networks, and enhances long-term profitability [79].

The SEM analysis confirms that the three key indicators of firm competitiveness—increased value creation, reduced costs, and non-financial assets—demonstrate a strong and significant relationship with the firm competitiveness construct. The increased value creation indicator, which includes new market opportunities, innovative strategies, first-mover advantages, and the ability to enter new markets, highlights that firms capable of creating innovative value can significantly strengthen their competitive position. This underscores that the creation of innovative value is a key factor in building sustainable competitive advantage.

The reduced costs indicator, which includes operational cost efficiency, labor productivity, and cost reduction strategies, signifies that effective resource management and cost reduction are important elements in maintaining competitiveness. The improvement in labor productivity, as one of the core components, indicates that firms that can optimize processes and costs efficiently will have a stronger position in the market. The non-financial assets indicator, including positive reputation, brand differentiation, and customer satisfaction, emphasizes the importance of intangible assets in strengthening competitive advantage. High customer satisfaction, as the dominant factor, underscores that strong relationships with customers and a solid brand reputation are strategic assets that competitors find difficult to replicate, directly contributing to competitiveness.

Despite the positive findings, the research also acknowledges that the effectiveness of firm competitiveness in enhancing firm performance may vary depending on external factors, such as market conditions, competition intensity, and government policies [54]. Therefore, companies must continuously adapt to market dynamics, develop innovative strategies, and ensure that their competitiveness delivers sustainable long-term advantages. This adaptability is important for firms in industries facing rapid technological changes and increased market competition.

The results confirm that firm competitiveness is a key driver of firm performance, both in financial and non-financial aspects. Companies that strategically leverage their competitive position will enjoy higher operational efficiency, better customer satisfaction, and stronger business growth. Consequently, firms should continue to invest in developing internal resources, business innovation, and competitive strategies that are adaptable and long-term focused. This will enable them to maximize the benefits of their competitiveness and continuously improve Firm Performance over time.

5.4. The Moderating Effect of Government Support

The results of this study demonstrate that government support significantly moderates the relationship between servitization and firm performance, as well as between digitalization and firm performance. These findings underscore the critical role that government policies, incentives, and infrastructure play in enhancing the positive impact of both servitization and digitalization on firm performance. Specifically, the study reveals that the higher the level of government support, the stronger the positive impact of servitization and digitalization on firm performance.

From the perspective of RDT, government support serves as a vital external resource that helps firms address internal limitations and align with a dynamic business environment [80]. In the context of servitization, firms often face challenges in investing in service capabilities and developing the human resources needed to drive a service-oriented business transformation. With adequate government support in the form of innovation policies, financial incentives, and technological infrastructure, firms can accelerate servitization adoption, improve operational efficiency and effectiveness, and ultimately enhance firm performance [23]. For instance, government subsidies and regulatory support for digital adoption enable firms to reduce the barriers associated with the initial costs of implementing new service-based models, which can otherwise hinder performance improvements.

Additionally, the RDT emphasizes that government support aids firms in maximizing the utilization of their internal resources, helping to improve firm performance [15]. Servitization often requires significant investment in digital technologies, development of value-added services, and skill enhancement for employees. With government support, firms gain easier access to funding, reduce the risk of investing in service innovations, and accelerate the development of organizational capabilities that support service-based business transformations [58]. This support strengthens firms’ internal capabilities and allows them to achieve superior performance. For example, in the shipping industry, firms that receive government incentives for adopting digital logistics systems are better equipped to improve service efficiency, reduce delivery times, and cut operational costs, all of which positively impact firm performance.

Similarly, government support also plays a moderating role in enhancing the impact of digitalization on firm performance. The study shows that government policies, digital infrastructure investments, and fiscal incentives strengthen firms’ ability to effectively implement digitalization, thus maximizing its positive effects on performance. In the context of digitalization, government support acts as a strategic resource that helps firms overcome barriers related to technology adoption, skill gaps, and the high costs associated with digital transformation [80]. For example, firms that receive tax incentives for technology investments or access to advanced IT infrastructure are better equipped to implement digitalization than those facing financial and regulatory challenges.

From the RBV perspective, digitalization enhances a firm’s internal capabilities by enabling it to optimize processes, improve decision-making, and innovate more quickly [43]. However, the success of digitalization in improving firm performance also depends on the external conditions supporting digital transformation [40]. In rapidly evolving digital environments, firms in countries with favorable regulatory frameworks, robust digital infrastructure, and policies supporting digital transformation are more likely to succeed in adopting digital business models and improving performance. For instance, in countries with strong data protection laws, fast-developing digital infrastructure, and government incentives for digital transformation, firms are more adaptable to technological changes, leading to higher levels of innovation and improved firm performance [44].

Additionally, government support helps firms overcome high upfront costs, bridge skills gaps, and reduce uncertainty about how digital transformation will affect particular industries. With clear government policies, innovation funding, and digital training programs, firms can effectively implement digitalization, enhancing efficiency, expanding market reach, and improving customer satisfaction.

In the shipping sector, the moderating role of government support is evident in interventions that reduce information, coordination, and financing frictions and create a more enabling operating environment. Port modernization and digital integration via national port community systems in the “National Logistics Ecosystem” and the customs single window streamline documentation and improve process visibility at gateways; consolidation and standardization of state-owned port operators enhance operational consistency; procedure simplification through electronic licensing lowers administrative burdens for deploying new services and digital processes; seafarer training and certification aligned with international standards upgrade the talent base for digitally enabled service delivery; and fiscal measures in the form of tax incentives, direct subsidies, and grant schemes ease upfront investment in technology and service capabilities. Taken together, these actions help firms convert servitization and digitalization into efficiency gains, shorter turnaround and delivery times, and stronger performance. Nonetheless, uneven infrastructure and implementation across ports can attenuate the benefits, which implies that the effects depend on sustained roll-out and targeting.

However, the effectiveness of government support as a moderator also depends on the appropriateness of the policies being implemented. Policies that are too rigid or incentives that do not align with the needs of specific industries may limit the effectiveness of digitalization in improving firm performance. Thus, governments should design flexible, industry-specific policies that facilitate the efficient adoption of digital technologies and contribute to improved performance outcomes [81].

5.5. Limitations and Future Research

This study is cross-sectional, limiting causal inference and leaving open the possibility of reverse causality among focal constructs. To maintain a simple, well-identified specification, the model estimates direct effects and a single theorized moderator, without testing mediating pathways. All constructs are measured at the firm level using one knowledgeable managerial informant per organization, which may introduce perceptual bias and common-method variance.

Future research should employ longitudinal or panel designs, quasi-experimental strategies, and techniques that address endogeneity. Triangulation of perceptual measures with objective indicators is recommended. Testing theoretically grounded mediators (e.g., firm competitiveness, service capability, customer satisfaction, process integration, digital maturity), incorporating objective proxies for regional infrastructure readiness, and using multi-informant and multi-group analyses would refine understanding of mechanisms and contextual heterogeneity.

6. Conclusions

This study highlights the impact of servitization and digitalization on firm competitiveness and firm performance, with government support acting as a moderating factor. First, this research underscores the value of servitization as a driver of competitiveness and performance. Businesses in the shipping sector can stand out from the competition, enhance client relations, and improve operational effectiveness by combining services with their main product offerings. Second, digitalization also significantly enhances both firm competitiveness and firm performance by enabling improvements in internal processes, data-driven decision-making, and technological innovations that streamline operations and create value-added services. Finally, the moderating role of government support is a central contribution. The results suggest that government policies, financial incentives, and infrastructure support serve as enabling conditions for effective servitization and digitalization. These external resources mitigate risks related to technological investment and help firms align strategies with market and regulatory changes, which is consistent with RDT and RBV.

This research suggests that firms aiming to improve competitiveness and performance through servitization and digitalization should actively leverage available government support. Policymakers should focus on tailored, industry-specific incentives and infrastructure that facilitate technological innovation and service-based business models. Firms should also invest in internal capabilities, including workforce skills and technological expertise, to complement external support and maximize the benefits of these strategies.

Distinctively, this study provides an integrated analysis of servitization and digitalization within a single sector and empirically tests government support as a moderating factor, using validated, sector-adapted measures grounded in the Indonesian shipping context. The study also clarify the theoretical framing by linking the results to the RBV, which explains how internal capabilities shape competitive position and outcomes, and to RDT, which explains how external supports condition these effects.

While this study provides valuable insights, several limitations should be acknowledged. The findings are specific to the Indonesian shipping industry, which may not be directly applicable to other sectors or regions with different technological or regulatory conditions. The sample obtained through purposive sampling that meets the research criteria also means the results cannot be generalized to all companies. Companies with smaller operational scales or newer market entrants are excluded, potentially overlooking different patterns outside these criteria. Additionally, the cross-sectional design limits the ability to assess long-term impacts. Future research could address these limitations by using longitudinal data, incorporating multiple respondents per firm and objective indicators, and comparing ports or regions to assess heterogeneity in policy implementation and infrastructure readiness.