Abstract: As an important factor driving the innovation of the manufacturing industry, the rising labor cost is playing an increasingly forceful role in the transformation of service-oriented manufacturing enterprises. Based on the hand-collected data of service-oriented A-share manufacturing listed companies from 2013 to 2018, this paper systematically investigates the impact and action mechanism of labor cost rise on the service-oriented transformation of manufacturing industry from the perspectives of embedded service-orientation and mixed service-orientation. The results show that the rise of labor cost can “force” the manufacturing enterprises to carry out service-oriented transformation, which is mainly reflected in its significant positive impact on the embedded servitization, but the impact on the mixed servictization is not significant. In particular, this “reverse forcing” effect has a significant persistence over a longer period of time, and presents U-shaped dynamic change characteristics of decline first and then rise. The result of a mechanism analysis shows that although the increase of labor cost is difficult to indirectly drive the improvement of the overall service-oriented level of manufacturing industry through information technology investment, it can promote the embedded servitization and inhibit the mixed servitization through this way. Further analysis shows that in the context of turbulent economic environment, the economic policy uncertainty has significantly increased the “forcing” effect of labor cost rise on the servitization of the manufacturing industry.

Key words: labor cost, information technology investment, economic policy uncertainty, manufacturing industry servicizing