Developing technological capabilities for Industry 4.0 adoption: An analysis of the role of inbound open innovation in small and medium‐sized enterprises

Abstract

To keep up with rapid technological change, firms are pushed to acquire new competencies and resources, often leveraging the external networks in which they are involved. The paper examines how firms' engagement in inbound open innovation (OI) enables the adoption of Industry 4.0 (I4.0) technologies in small and mediumsized enterprises (SMEs) through the deployment of technological capabilities. We combine the OI and dynamic capabilities frameworks to assess how the absorption of knowledge from different actors impacts the necessary technological capabilities for adopting I4.0 technologies. The capabilities are categorized in technological sensing, seizing and reconfiguring. The study is based on in-depth case studies of two selected SMEs from the footwear industry. The cases show that engaging in external collaborations, particularly with universities, pushes SMEs to renew the bundle of competencies underlying their technological capabilities. However, this effect is influenced by the OI modalities adopted by both companies. While in Company A OI takes place through a broader array of formal and informal linkages that contribute to the exploration of distant knowledge bases and the experimentation of more diverse technologies, such as the Internet of Things, Company B relies on informal networking concentrated in its own field of specialization for the adoption of manufacturingspecific I4.0 solutions, such as automated robots and 3D printing.

Antecedents of Industry 4.0 capabilities and technological innovation: a dynamic capabilities perspective

“…Literature and previous research (Lepore et al , 2023) emphasized the importance of dynamic capabilities in supporting, promoting and facilitating the adoption of new technology, especially Industry 4.0 technologies. Firms need to develop their sensing capabilities, such as using market research and marketing intelligence, which enable firms to know the needs of their customers (Hunt and Madhavaram, 2020), and building digital sensing capabilities that monitor changes in technology and enhance and assess opportunities from adopting this technology (Ellström et al , 2022).…”

“…Seizing capability refers to those capabilities that firms possess and help capture opportunities and turn them into an internal organizational routine (Atiku and Abatan, 2021) and thus, benefiting from them, leading to enhancing the efficiency and effectiveness of business. Seizing capability allows organizational and administrative commitment to achieve goals by exploiting opportunities as possible (Lepore et al , 2023) because identifying sources of opportunities is not sufficient to achieve their goal (Ellström et al , 2022). Consequently, it is necessary to use seizing capability in transforming these opportunities into a measurable reality on the ground.…”

“…The main exploitation elements that enable these firms to reconfigure and transform their resources into tangible value include the tacit and explicit competencies, skills and knowledge that individuals possess in the company (Teece et al , 2016); systems, current technological equipment and databases;, administrative systems such as organizational structures, rules and policies (Ellström et al , 2022); standards; and organizational culture. These elements help mobilize and exploit available resources in a way that makes them compatible with new technology (Lepore et al , 2023), helping firms increase the readiness of organizations to introduce new technology, including Industry 4.0 (Garbellano and Da Veiga, 2019). Reconfiguring capabilities focus on preparing for continuous renewal and change in organizational routine (Lepore et al , 2023), making the resources and assets of firms more compatible with technological changes (Aghimien et al , 2022).…”

“…These elements help mobilize and exploit available resources in a way that makes them compatible with new technology (Lepore et al , 2023), helping firms increase the readiness of organizations to introduce new technology, including Industry 4.0 (Garbellano and Da Veiga, 2019). Reconfiguring capabilities focus on preparing for continuous renewal and change in organizational routine (Lepore et al , 2023), making the resources and assets of firms more compatible with technological changes (Aghimien et al , 2022). Therefore, firms need to develop their reconfiguring capabilities, making their assets and resources in line with new dynamic changes and innovative digital strategies.…”

“…There is ample empirical evidence in the literature (Centobelli et al , 2023; Chari et al , 2022; Chatterjee et al , 2023; Lepore et al , 2023; Vu et al , 2023) focusing on the importance of dynamic capabilities in strengthening Industry 4.0 capabilities. These dynamic capabilities facilitate emerging technology adoption that enhances Industry 4.0 capabilities (Chatterjee et al , 2023), and thus dynamic capabilities can provide the ability to deal with data and systems of artificial intelligence and machine learning that enable these firms to build innovative capabilities (Lepore et al , 2023).…”