Service innovation decision for manufacturing enterprises based on a coopetition perspective

•Whether and when a manufacturing enterprise should cooperate with its competitor to conduct service innovation is investigated.•Study manufacturing enterprises’ service innovation by pairing product differentiation and overflow effect.•Consider coopetition strategy’s impact of service innovation on product sales and service level.•This study provides guidance for manufacturing enterprises's collaborative service innovation. Based on product technology, service innovation can enable manufacturing enterprises to achieve value-added and competitiveness improvement. But the resources and capabilities of individual enterprises hinder service innovation, more and more enterprises choose to cooperate with competitors for service innovation. Therefore, this paper studies the strategic issues of service innovation in manufacturing enterprises based on the theory of coopetition. First, we construct a competition game model between two manufacturing service integrators (MSIs) regarding service prices, service levels, and service innovation investment. Then, a coopetition game model is established and compared for analysis. We have found that cooperation between MSI and competitor for service innovation can provide higher-quality services and create higher market demand. However, cooperation is not always beneficial for service innovation, as there exists a favorable environment for cooperation within which MSIs can achieve higher profits with lower service prices and investment in service innovation. In addition, the spillover effect in competition strategy is positively related to the service innovation performance of MSIs, but it has little impact under the coopetition strategy. These findings provide guidance and reference for the development of service innovation and service-oriented transformation in manufacturing enterprises.