Abstract: The cost and risk issues in the transformation of enterprise servitization may trigger negative impact on the productivity. From the perspective of cost and risks, this paper analyzes the nonlinear effect of the servitization of manufacturing input on total factor productivity with the cross-country panel data. The empirical results show that the servitization of manufacturing input has “U-shaped” effect on TFP; the lower level of servitization of manufacturing input has an inhibiting effect on TFP, but after passing through the inflection point, it has a positive impact on TFP. This kind of “U-shaped” effect that first inhibiting then promoting exists in both the developed countries and the developing countries; the inflection point on the “U-shape” curve is located around 83% of the servitization of manufacturing input. When implementing the servitization strategy, each country should do it step by step, pay attention to customer participation, establish risk sharing mechanism, and avoid the adverse impact of blind servitization adjustment on economic growth.

Key words: servitization of manufacturing input; TFP; Malmquist Index Method; nonlinear effect