IDEAS home Printed from https://ideas.repec.org/a/gam/jsusta/v14y2022i10p6214-d819713.html
   My bibliography  Save this article

The Impact of Digital Capability on Manufacturing Company Performance

Author

Listed:
  • Xiaoli Wang

    (School of Economics and Management, Northwest University, Xi’an 710127, China)

  • Ying Gu

    (School of Economics and Management, Northwest University, Xi’an 710127, China)

  • Mahmood Ahmad

    (Business School, Shandong University of Technology, Zibo 255000, China)

  • Chaokai Xue

    (Business School, Shandong University of Technology, Zibo 255000, China)

Abstract

Digital capability is an advanced capability that manufacturing companies need for their digital and intelligent development. At present, the influence mechanism behind the impact of digital capability on manufacturing companies’ performance is still unclear and lacks quantitative analysis. Based on the dynamic capability view, we propose a research model to investigate digital capability, digital innovation, value co-creation, and company performance and conduct an empirical study based on questionnaire data from 209 digital manufacturing companies. The empirical results show that digital capability has a significant positive impact on company performance. The results further show that digital innovation mediates the effect of digital capability on performance within a company, while outside the company, value co-creation mediates the impact of digital capability on company performance. This research provides empirical support in favor of companies developing digital capabilities in the context of digital transformation and offers theoretical insight into the contradiction between the potential value of digital capability and companies’ practice.

Suggested Citation

  • Xiaoli Wang & Ying Gu & Mahmood Ahmad & Chaokai Xue, 2022. "The Impact of Digital Capability on Manufacturing Company Performance," Sustainability, MDPI, vol. 14(10), pages 1-24, May.
    • Handle: RePEc:gam:jsusta:v:14:y:2022:i:10:p:6214-:d:819713
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2071-1050/14/10/6214/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2071-1050/14/10/6214/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Praveen K. Kopalle & V. Kumar & Mohan Subramaniam, 2020. "How legacy firms can embrace the digital ecosystem via digital customer orientation," Journal of the Academy of Marketing Science, Springer, vol. 48(1), pages 114-131, January.
    2. Annarelli, Alessandro & Battistella, Cinzia & Nonino, Fabio & Parida, Vinit & Pessot, Elena, 2021. "Literature review on digitalization capabilities: Co-citation analysis of antecedents, conceptualization and consequences," Technological Forecasting and Social Change, Elsevier, vol. 166(C).
    3. Lynn Wu & Lorin Hitt & Bowen Lou, 2020. "Data Analytics, Innovation, and Firm Productivity," Management Science, INFORMS, vol. 66(5), pages 2017-2039, May.
    4. Teece, David J., 2018. "Profiting from innovation in the digital economy: Enabling technologies, standards, and licensing models in the wireless world," Research Policy, Elsevier, vol. 47(8), pages 1367-1387.
    5. Jaime Gómez & Idana Salazar & Pilar Vargas, 2017. "Does Information Technology Improve Open Innovation Performance? An Examination of Manufacturers in Spain," Information Systems Research, INFORMS, vol. 28(3), pages 661-675, September.
    6. Shengbin Hao & Haili Zhang & Michael Song, 2019. "Big Data, Big Data Analytics Capability, and Sustainable Innovation Performance," Sustainability, MDPI, vol. 11(24), pages 1-15, December.
    7. Kumar Rakesh Ranjan & Stuart Read, 2016. "Value co-creation: concept and measurement," Journal of the Academy of Marketing Science, Springer, vol. 44(3), pages 290-315, May.
    8. Haili Zhang & Michael Song & Huanhuan He, 2020. "Achieving the Success of Sustainability Development Projects through Big Data Analytics and Artificial Intelligence Capability," Sustainability, MDPI, vol. 12(3), pages 1-23, January.
    9. Amit Karna & Ansgar Richter & Eberhard Riesenkampff, 2016. "Revisiting the role of the environment in the capabilities–financial performance relationship: A meta-analysis," Strategic Management Journal, Wiley Blackwell, vol. 37(6), pages 1154-1173, June.
    10. Alberto De La Calle & Inmaculada Freije & José Vicente Ugarte & Miguel Ángel Larrinaga, 2020. "Measuring the impact of digital capabilities on product-service innovation in Spanish industries," International Journal of Business Environment, Inderscience Enterprises Ltd, vol. 11(3), pages 254-274.
    11. Sampson Abeeku Edu & Mary Agoyi & Divine Quazie Agozie, 2020. "Integrating Digital Innovation Capabilities Towards Value Creation: A Conceptual View," International Journal of Intelligent Information Technologies (IJIIT), IGI Global, vol. 16(4), pages 37-50, October.
    12. Akter, Shahriar & Gunasekaran, Angappa & Wamba, Samuel Fosso & Babu, Mujahid Mohiuddin & Hani, Umme, 2020. "Reshaping competitive advantages with analytics capabilities in service systems," Technological Forecasting and Social Change, Elsevier, vol. 159(C).
    13. Kevin Zheng Zhou & Fang Wu, 2010. "Technological capability, strategic flexibility, and product innovation," Strategic Management Journal, Wiley Blackwell, vol. 31(5), pages 547-561, May.
    14. F. Brocal & C. González & D. Komljenovic & P. F. Katina & Miguel A. Sebastián, 2019. "Emerging Risk Management in Industry 4.0: An Approach to Improve Organizational and Human Performance in the Complex Systems," Complexity, Hindawi, vol. 2019, pages 1-13, June.
    15. Zaborek, Piotr & Mazur, Jolanta, 2019. "Enabling value co-creation with consumers as a driver of business performance: A dual perspective of Polish manufacturing and service SMEs," Journal of Business Research, Elsevier, vol. 104(C), pages 541-551.
    16. N.G. Vovchenko & A.V. Andreeva & A.S. Orobinskiy & Y.M. Filippov, 2017. "Competitive Advantages of Financial Transactions on the Basis of the Blockchain Technology in Digital Economy," European Research Studies Journal, European Research Studies Journal, vol. 0(3B), pages 193-212.
    17. Sidney G. Winter, 2003. "Understanding dynamic capabilities," Strategic Management Journal, Wiley Blackwell, vol. 24(10), pages 991-995, October.
    18. Viktorija Badasjane & Anna Granlund & Mats Ahlskog & Jessica Bruch, 2022. "Coordination of Digital Transformation in International Manufacturing Networks—Challenges and Coping Mechanisms from an Organizational Perspective," Sustainability, MDPI, vol. 14(4), pages 1-21, February.
    19. Dominik M. Wielgos & Christian Homburg & Christina Kuehnl, 2021. "Digital business capability: its impact on firm and customer performance," Journal of the Academy of Marketing Science, Springer, vol. 49(4), pages 762-789, July.
    20. Wang, Zhan & Kim, Hyun Gon, 2017. "Can Social Media Marketing Improve Customer Relationship Capabilities and Firm Performance? Dynamic Capability Perspective," Journal of Interactive Marketing, Elsevier, vol. 39(C), pages 15-26.
    21. Yunis, Manal & Tarhini, Abbas & Kassar, Abdulnasser, 2018. "The role of ICT and innovation in enhancing organizational performance: The catalysing effect of corporate entrepreneurship," Journal of Business Research, Elsevier, vol. 88(C), pages 344-356.
    22. O'Reilly, Charles A., III & Tushman, Michael L., 2013. "Organizational Ambidexterity: Past, Present and Future," Research Papers 2130, Stanford University, Graduate School of Business.
    23. David J. Teece, 2007. "Explicating dynamic capabilities: the nature and microfoundations of (sustainable) enterprise performance," Strategic Management Journal, Wiley Blackwell, vol. 28(13), pages 1319-1350, December.
    24. Nishikawa, Hidehiko & Schreier, Martin & Ogawa, Susumu, 2013. "User-generated versus designer-generated products: A performance assessment at Muji," International Journal of Research in Marketing, Elsevier, vol. 30(2), pages 160-167.
    25. David J. Teece & Gary Pisano & Amy Shuen, 1997. "Dynamic capabilities and strategic management," Strategic Management Journal, Wiley Blackwell, vol. 18(7), pages 509-533, August.
    26. Xinshu Zhao & John G. Lynch & Qimei Chen, 2010. "Reconsidering Baron and Kenny: Myths and Truths about Mediation Analysis," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 37(2), pages 197-206, August.
    27. Ramaswamy, Venkat & Ozcan, Kerimcan, 2018. "What is co-creation? An interactional creation framework and its implications for value creation," Journal of Business Research, Elsevier, vol. 84(C), pages 196-205.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Hongtao Wang & Wencheng Cao & Fei Wang, 2022. "Digital Transformation and Manufacturing Firm Performance: Evidence from China," Sustainability, MDPI, vol. 14(16), pages 1-18, August.
    2. Tianshun Ruan & Ying Gu & Xinhao Li & Rong Qu, 2022. "Research on the Practical Path of Resource-Based Enterprises to Improve Environmental Efficiency in Digital Transformation," Sustainability, MDPI, vol. 14(21), pages 1-17, October.
    3. Jaehwi Jeong & Donseung Choi & Jangsoon Kim, 2022. "When Digital Capabilities of MNC Subsidiaries Matters: The Moderating Effect of Subsidiary Autonomy in Korea," Sustainability, MDPI, vol. 14(22), pages 1-13, November.
    4. Wenjing Zu & Guoda Gu & Sihan Lei, 2022. "Does Digital Transformation in Manufacturing Affect Trade Imbalances? Evidence from US–China Trade," Sustainability, MDPI, vol. 14(14), pages 1-14, July.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Jantunen, Ari & Tarkiainen, Anssi & Chari, Simos & Oghazi, Pejvak, 2018. "Dynamic capabilities, operational changes, and performance outcomes in the media industry," Journal of Business Research, Elsevier, vol. 89(C), pages 251-257.
    2. Qaiyum, Sameer & Wang, Catherine L., 2018. "Understanding internal conditions driving ordinary and dynamic capabilities in Indian high-tech firms," Journal of Business Research, Elsevier, vol. 90(C), pages 206-214.
    3. FeCheng Ma & Farhan Khan & Kashif Ullah Khan & Si XiangYun, 2021. "Investigating the Impact of Information Technology, Absorptive Capacity, and Dynamic Capabilities on Firm Performance: An Empirical Study," SAGE Open, , vol. 11(4), pages 21582440211, November.
    4. André de Abreu Saraiva Monteiro Alves & Fernando Manuel Pereira de Oliveira Carvalho, 2022. "How Dynamic Managerial Capabilities, Entrepreneurial Orientation, and Operational Capabilities Impact Microenterprises’ Global Performance," Sustainability, MDPI, vol. 15(1), pages 1-23, December.
    5. Li, Lei & Lin, Jiabao & Ouyang, Ye & Luo, Xin (Robert), 2022. "Evaluating the impact of big data analytics usage on the decision-making quality of organizations," Technological Forecasting and Social Change, Elsevier, vol. 175(C).
    6. Haarhaus, Tim & Liening, Andreas, 2020. "Building dynamic capabilities to cope with environmental uncertainty: The role of strategic foresight," Technological Forecasting and Social Change, Elsevier, vol. 155(C).
    7. Cheng, Ru & Tao, Lei & Wang, Qiang & Zhao, Xiande, 2023. "The impact of value co-creation orientation on radical service innovation: Exploring a serial mediation mechanism," International Journal of Production Economics, Elsevier, vol. 262(C).
    8. Xiaoming He & Yaqun Yi & Zelong Wei, 2019. "New product development capabilities in China: the moderating role of TMT cooperative behavior," Asian Business & Management, Palgrave Macmillan, vol. 18(2), pages 73-97, April.
    9. Suqin Liao & Qianying Hu & Jingjing Wei, 2023. "How to Leverage Big Data Analytic Capabilities for Innovation Ambidexterity: A Mediated Moderation Model," Sustainability, MDPI, vol. 15(5), pages 1-19, February.
    10. Siddharth Gaurav Majhi & Ambuj Anand & Arindam Mukherjee & Nripendra P. Rana, 2022. "The Optimal Configuration of IT-Enabled Dynamic Capabilities in a firm’s Capabilities Portfolio: a Strategic Alignment Perspective," Information Systems Frontiers, Springer, vol. 24(5), pages 1435-1450, October.
    11. Liu, Yi & Liao, Yonghai & Li, Yuan, 2018. "Capability configuration, ambidexterity and performance: Evidence from service outsourcing sector," International Journal of Production Economics, Elsevier, vol. 200(C), pages 343-352.
    12. Vrontis, Demetris & Basile, Gianpaolo & Simona Andreano, M. & Mazzitelli, Andrea & Papasolomou, Ioanna, 2020. "The profile of innovation driven Italian SMEs and the relationship between the firms’ networking abilities and dynamic capabilities," Journal of Business Research, Elsevier, vol. 114(C), pages 313-324.
    13. Anna S. Cui & Fang Wu, 2016. "Utilizing customer knowledge in innovation: antecedents and impact of customer involvement on new product performance," Journal of the Academy of Marketing Science, Springer, vol. 44(4), pages 516-538, July.
    14. Soluk, Jonas & Decker-Lange, Carolin & Hack, Andreas, 2023. "Small steps for the big hit: A dynamic capabilities perspective on business networks and non-disruptive digital technologies in SMEs," Technological Forecasting and Social Change, Elsevier, vol. 191(C).
    15. Philipp Nitzsche & Bernd W. Wirtz & Vincent Göttel, 2016. "Innovation Success In The Context Of Inbound Open Innovation," International Journal of Innovation Management (ijim), World Scientific Publishing Co. Pte. Ltd., vol. 20(02), pages 1-38, February.
    16. Ritu Singh & Parikshit Charan & Manojit Chattopadhyay, 2019. "Dynamic capabilities and responsiveness: moderating effect of organization structures and environmental dynamism," DECISION: Official Journal of the Indian Institute of Management Calcutta, Springer;Indian Institute of Management Calcutta, vol. 46(4), pages 301-319, December.
    17. Ying Guo, 2023. "External Knowledge Acquisition and Green Innovation in Chinese Firms: Unveiling the Impact of Green Dynamic Capabilities," SAGE Open, , vol. 13(3), pages 21582440231, July.
    18. Schriber, Svante & Löwstedt, Jan, 2020. "Reconsidering ordinary and dynamic capabilities in strategic change," European Management Journal, Elsevier, vol. 38(3), pages 377-387.
    19. Forliano, Canio & Ferraris, Alberto & Bivona, Enzo & Couturier, Jerome, 2022. "Pouring new wine into old bottles: A dynamic perspective of the interplay among environmental dynamism, capabilities development, and performance," Journal of Business Research, Elsevier, vol. 142(C), pages 448-463.
    20. Samuel Adomako & Nguyen Phong Nguyen, 2023. "Green creativity, responsible innovation, and product innovation performance: A study of entrepreneurial firms in an emerging economy," Business Strategy and the Environment, Wiley Blackwell, vol. 32(7), pages 4413-4425, November.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jsusta:v:14:y:2022:i:10:p:6214-:d:819713. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.