AI-readiness and production resilience: empirical evidence from German manufacturing in times of the Covid-19 pandemic

Abstract

The outbreak of the Covid-19 pandemic led to restrictions in production worldwide. Numerous firms were affected and unable to keep up production due to lockdowns. In disruptive events like this, the resilience of the production system is of central importance, as the survivability of the entire firm depends on it. In this context, the literature argues that cutting-edge technologies, such as Artificial Intelligence (AI), raise the proactive and reactive capabilities of firms, enabling them to better resist and recover from disruptive events and thus, show a higher resilience. This paper takes up this topic and observes the Covid-19 pandemic with the aim to analyse whether a firm's AI-readiness had an impact on its production resilience during the spring 2020 lockdown in Germany. For this purpose, we combine two large-scale surveys containing data from 237 manufacturers in Germany and test hypotheses based on quantitative analyses. Our results show that firms could indeed benefit from AI-enabled production during the lockdown. However, it is also clear that manufacturers have to exceed a certain AI threshold to significantly increase their resilient capabilities and realise positive effects. Our findings not only hold implications for research, but also provide recommendations for the resilience management of manufacturers.