Transitioning to a Smart Industry with Open Innovation

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Through recent innovations in IT, the manufacturing industry is undergoing a fourth industrial revolution: the transition to a Smart Industry. With technologies like the internet, sensors, cloud computing and big data, the production process is changing towards a collection of smart, flexible, and efficient cyber-physical systems. The Dutch manufacturing industry needs this transition to stay globally competitive, so it is important for Dutch firms to digitally transform by adopting Smart Industry related technologies. There is still an incomplete understanding of how this transition can be improved and how firms can adopt these technologies, as well as a lot more potential for digital transformation in Dutch firms. Recent literature suggests that an open innovation approach could enable firms to adopt more Smart Industry technologies, yet little empirical research has been done so far to investigate the relationship between open innovation and digital transformation. The goal of this study was therefore to empirically investigate this relationship to help Dutch manufacturing firms in their digital transformation, and to contribute to a better theoretical framework of the relevant factors at play in the transition to a Smart Industry. Open innovation as a whole, as well as two dimensions of open innovation, inbound and outbound knowledge flows, were tested for their effect on digital transformation. Representative data from the European Manufacturing Survey of 169 Dutch manufacturing firms was used in multiple regression analyses that showed a small to moderate positive significant effect of open innovation and its two dimensions on the degree of Smart Industry technology adoption in firms. This implies that firms should become more open to facilitate digital transformation. A post-hoc analysis showed that employee involvement and outsourcing R&D might be more important in this relationship compared to other open innovation practices. Future research could now strive to better and more specifically understand the role of open innovation, its dimensions, its individual practices and their interactions, in the context of the transition to a Smart Dutch manufacturing industry.
Faculteit der Managementwetenschappen