The role of absorptive capacity in the adoption of Smart Manufacturing

Linking competitive priorities, smart manufacturing advancement and organizational microfoundations

Purpose

Smart Manufacturing (SM) lies at the core of Industry 4.0. Operations management research has investigated the determinants of SM advancement but there is still limited understanding of the linkages between SM and organizational factors and about whether both the technological and organizational subsystems for SM are guided by firms’ competitive priorities. To close these gaps, building on operations strategy theory, this paper aims to empirically test a model positing that competitive priorities drive SM advancement. The relation between competitive priorities and SM advancement is assumed to be mediated by organizational microfoundations.

Design/methodology/approach

Using data from a single respondent survey with 234 firms in the automotive component industry, structural equation modeling is adopted to test the model hypotheses. Relevant constructs are measured with reference to the lead plant for SM.

Findings

Findings highlight that SM advancement is driven by the need to simultaneously compete in terms of cost, quality and delivery, thus suggesting that manufacturers view SM as a mean to develop multiple manufacturing capabilities. Organizational microfoundations fully mediate the relation between competitive priorities and SM advancement.

Originality/value

Results have implications for SM research, as they provide an understanding of the strategic priorities of firms engaging in SM. Findings also bear relevance for manufacturing executives engaged in the SM transformation, as they provide quantitative evidence that shaping an adequate organizational environment is a prerequisite for SM advancement.

Quality functions' use of customer feedback as activation triggers for absorptive capacity and value co-creation

Purpose

The purpose is to understand how the role of quality functions might evolve amidst digitalisation and an increased focus on services. This study focuses on customer feedback and how it can function as activation triggers for developing absorptive capacity, as well as how it relates to the value creation processes.

Design/methodology/approach

Following a qualitative research design, the authors gathered primary data from interviews with quality managers at 17 UK and Swedish firms and triangulated it with secondary information from the firms' web pages.

Findings

The findings show that customer feedback-based activation triggers can support development of absorptive capacity in the quality function if there are established processes for acting on customer feedback. This is often the case for codified feedback, which normally concerns products. However, digitalisation offers new opportunities of engaging in value co-creation, and firms need to develop digital capabilities to manage new technologies and data analytic tools. For personalised feedback (the main category of service-related feedback), established processes are missing.

Originality/value

This study work contributes to knowledge about how quality functions respond to customer feedback on both products and services. It clarifies why the quality function sometimes struggles to contribute to service quality as much as to product quality. From a theory development perspective, the authors contribute to understanding customer feedback-based activation triggers, how they lead to development of absorptive capacity and their relation to value co-creation on a functional level.

Environmental collaboration with suppliers and cost performance: exploring the contingency role of digital orientation from a circular economy perspective

Purpose

To examine the interplay between sustainable supply chain management (SSCM) and circular economy, this research conceptualises and empirically tests an integrative framework of environmental information exchange with suppliers (ES), environmental product design (EPD) and cost performance (CP) with the contingency effect of digital orientation (DO). The associations proposed in the integrative framework provide a configuration of SSCM practices that support circular economy's restorative processes in the digital age.

Design/methodology/approach

The resource orchestration theory and contingency theory are used to investigate the mediation and moderating effects, which were tested by a moderated mediation analysis of survey data of 100 firms in Australia.

Findings

The results show that EPD fully mediates the relationship between ES and CP. Further, DO was found to moderate the relationship between EPD and CP, but not the relationship between ES and EPD.

Practical implications

The empirical findings of this study offer an effective SSCM practice configuration for firms seeking to target advanced circular business models and economic benefits. Managers should be aware that ES may not be enough to improve CP; EPD is a required mechanism to translate the ES benefits into cost superiority. Managers should also stimulate a DO culture to develop effective EPD capabilities, which leads to improved CP and a foundation for companies seeking to target circularity.

Originality/value

This study advances prior theoretical and practical knowledge. The authors propose and empirically test an integrated SSCM and circular economy model that incorporates mediation and moderation effects to clarify inconsistent findings in prior work, which provides a more holistic and practical understanding of SSCM practices in the digital context. Furthermore, the SSCM literature recommends the adoption of circular economy principles. The integrated model in this study provides a bridge between SSCM and circular economy.