Can FDI Promote the Servitization Transformation of Enterprises?——Theory and empirical evidence from China

Amid growing environmental complexity and the pressing need for servitization transformation in manufacturing, this study investigates how foreign investment drives this transformation. Leveraging China’s substantial stock of FDI and its gradual market liberalization, this study examines the effect of foreign investment on the servitization of manufacturing enterprises using the difference-in-differences approach and the 2002 edition of the Catalogue for the Guidance of Foreign Investment Industries as a quasi-natural experiment. Results confirm that foreign investment significantly promotes servitization transformation, a finding robust to parallel trend and placebo tests. Mechanism and heterogeneity analyses reveal that spillover and competitive effects underlie this impact, which is stronger in human capital-rich firms, capital-intensive industries, and highly marketized regions. Furthermore, FDI accelerates advanced servitization and upgrades traditional services via modern service integration. These findings offer policy insights for enhancing global value chain participation and industrial modernization through openness and resource integration.