Digitization of manufacturing: the role of external search

Abstract

PurposeManufacturers seek to innovate and improve processes using new digital technologies. However, knowledge about these new technologies often resides outside a firm's boundaries. The authors draw on the concept of absorptive capacity and the literature on open innovation to explore the role of external search in the digitization of manufacturing.Design/methodology/approachThe authors developed and distributed a survey to manufacturing firms in Switzerland, for which 151 complete responses were received from senior managers. The authors used multiple linear regressions to study the relations among the breadth and depth of external search, firms' adoption of digital technologies and operational performance outcomes.FindingsExternal search depth was found to relate positively to higher adoption of computing technologies and shop floor connectivity technologies. No significant correlation was found between external search breadth and firms' adoption of digital technologies. Regarding performance outcomes, there is some evidence that increased adoption of digital technologies relates positively to higher volume flexibility, but not to increased production cost competitiveness.Practical implicationsManufacturing firms that aim to digitize their processes can benefit from inbound open process innovation, but its utility varies for different clusters of digital technologies. Generally, the findings suggest that firms should build strong ties with a few external knowledge partners rather than surface relations with many.Originality/valueThis study contributes to the growing literature on the digitization of manufacturing with an analysis of the relation between firms' external search and their adoption of digital technologies. It adds early empirical insights to the literature on open process innovation.