The existing literature highlights a significant research gap regarding the influence of servitization in manufacturing on inter-firm performance. To address this gap, this study adopts a novel perspective focusing on risk-sharing mechanisms, exploring how servitization enables manufacturing service providers to collaboratively assume greater risks with their clients. Utilizing U.S. manufacturing data from 2003 to 2022, this research employs stock market excess returns as quantitative indicators for risk-sharing and risk exposure. Empirical analyses using large-scale panel data are conducted to validate these effects. The findings reveal that firms with higher degrees of servitization exhibit enhanced capabilities in sharing risks with their clients, thereby reducing the risks faced by the latter. However, it is important to note that the social embeddedness of manufacturers in the service sector may negatively impact this positive relationship. Specifically, manufacturers with higher levels of service embeddedness may experience a decline in their risk-sharing intensity with clients during the transition to servitization. This study not only addresses the research gap in the field of servitization from a supply chain management perspective but also advances the application of social embeddedness theory in strategic management practices within enterprises.