Abstract: How to successfully implement servitization strategy has become the focus of attention of manufacturing enterprises, but also an issue of theoretical research. Some studies have shown that there is an implicit positive correlation between servitization and enterprise financial performance, which can bring new value growth points to manufacturing enterprises. However, the servitization practices of some manufacturing enterprises show that the services investments do not increase the income for the enterprise as expected, and the enterprise does not improve its survival opportunities through the services businesses. This phenomenon is called ‘service paradox’ in academia.Because servitization is a multi-subject-oriented strategy, the development of services activities needs manufacturing enterprises to innovate the business model elements of cross-enterprise boundaries, such as the ways of collaboration with external suppliers and customers. Therefore, business model innovation of cross-enterprise boundaries has become an important carrier for traditional manufacturing enterprises to implement servitization transformation. Business model innovation includes redesigning products or services for customers, changing the existing production processes and operation ways of the enterprise, proposing new ways to achieve transactions and benefits distribution with suppliers and customers, etc. All of these will help enterprises create and deliver new value for their customers, which can give back higher performance for themselves. However, a lot of practice shows that some enterprises have encountered ‘service paradox’ because of the failure of business model adjustment or innovation. So, what roles do business model innovations play in the successful implementation of servitization strategy? It becomes the important academic issues in the field of servitization research. Unfortunately, the current empirical research is rarely reported. This study aims to clarify the impact of servitization strategy on enterprise performance, and to explore the mediating role of business model innovation, which will enrich theories of servitization and business model innovation, provide theoretical basis for the successful implementation of servitization strategy.Based on both theories of servitization and business model, firstly, the influence of servitization strategy on enterprise performance is clarified, then the mediating role of business model innovation is discussed, and then the theoretical model of the relationships among servitization strategy, business model innovation and enterprise performance is constructed, and four sets of theoretical hypotheses are put forward. A questionnaire survey is conducted on the top executives of 300 service-oriented manufacturing enterprises from China. A total of 243 are collected, of which 236 are valid questionnaires. We select enterprise size and enterprise age as control variables. Six hierarchical regression models are established and the proposed assumptions are tested by using spss17.0.The study findings are as follows: First, product-oriented servitization strategy has a significant positive correlation with enterprise performance, and customer-oriented servitization strategy has a U-shaped curve relationship with enterprise performance. Second, both product- oriented servitization strategy and customer-oriented servitization strategy contribute to business model innovation. Third, business innovation helps provide a better value experience to enhance customer recognition, and helps enterprises build the imitation barriers and maintain competitive advantages. Fourth, business model innovation plays the partially mediating role in ‘product-oriented servitization strategy and enterprise performance’ and ‘customer-oriented servitization strategy and enterprise performance’ respectively.The conclusions of this research have certain significance for theory and practice: First, product-oriented servitization strategy can significantly improve enterprise performance. Enterprises can enhance the function of products and the differentiation of services by providing customers with products-related services, including maintenance and repair, upgrading and other basic services, so as to enhance the competitive advantages of existing products. Second, there is a U-shaped relationship between customer-oriented servitization strategy and enterprise performance. Manufacturing enterprises provide customers with a series of customized services oriented to customer value enhancement, including process optimization and so on. In the early stage, because of the high investment, the capital occupation and the slow return of funds, it may lead to the inhibition of financial performance. However, with the further implementation, customized services can achieve customers locking, thus bringing about the improvement of enterprise performance. Getting to know earlier the threshold effect of customer-oriented servitization strategy can avoid the premature abandonment because of shortsightedness. Third, business model innovation is an effective way for manufacturing enterprise to implement servitization transformation. The manufacturing enterprises implementing servitization strategy should innovate their business models. By providing customers with novel services, building new business relationships, designing new trading and profit distribution models and so on, customers can gain a better value experience and keep loyalty to products and services. Thus, when manufacturing enterprises implement servitization strategy, they should consider redesigning and innovating their business models.

Key words: servitization strategy, business model innovation, enterprise performance, mediating