Industry 4.0 technologies, digital trust and technological orientation: What matters in open innovation?

Abstract

The fourth industrial revolution, termed Industry 4.0, offers a vital and valuable opportunity to drive social and technological innovations. It has state-of-the-art cyber-physical systems and related technological architecture, which can drastically increase a firm's productivity and innovation performance. Nevertheless, Industry 4.0 is also significantly shortening the product life cycles and demanding the pace of innovation to be accelerated. A firm, however, cannot accelerate the pace of its innovation by exclusively relying only on its internal resources. This is the reason firms are increasingly adopting open innovation strategy through collaboration with external stakeholders. The critical challenge that firms are facing while managing open innovation is trust among the stakeholders. Digital trust, attained through Industry 4.0 technologies, can play an instrumental role in promoting open innovation. Against this backdrop, the present study investigates the impact of digital trust on open innovation performance. The study investigates the role of technological orientation and technological absorption capacity in the association between digital trust and open innovation. Cross-country data of 324 electrical and electronics firms of three major Asia-Pacific countries, namely Malaysia, Indonesia, and Thailand, were collected using a close-ended questionnaire. The study employed partial least square-structural equation modeling (PLS-SEM) and PLS-multi group analysis (PLS-MGA) to analyze the modeled relationships. The results reveal that digital trust, composed of trust and Industry 4.0 technologies, has a significant positive impact on a firm's open innovation. Likewise, results also depict a strongly positive moderating role of technological orientation in the association between digital trust and open innovation. Finally, results also exhibit a significant mediating role of both potential and realized technological absorptive capacities in the association of digital trust and open innovation. It is the first-ever study discussing the linkage of digital trust with open innovation. The findings of this study suggest development of technology strategy to adopt Industry 4.0 technologies for accelerating the pace of open innovation.