Growing with smart products: Why customization capabilities matter for manufacturing firms

Manufacturing firms that engage in digital transformation develop increasingly smarter versions of their tangible products to reinvigorate growth in shrinking markets. However, they often struggle with translating their investments in digitalization capabilities into actual returns in the form of sa...

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Bibliographic Details
Published in:The Journal of product innovation management 2023-11, Vol.40 (6), p.794-816
Main Authors: Schulz, Colin, Kortmann, Sebastian, Piller, Frank T, Pollok, Patrick
Format: Article
Language:English
Subjects:
Customization
demand‐side perspective
Digital technology
digital transformation
Digitization
Manufacturing
mass customization
resource‐based view
Sales
smart products
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Summary:Manufacturing firms that engage in digital transformation develop increasingly smarter versions of their tangible products to reinvigorate growth in shrinking markets. However, they often struggle with translating their investments in digitalization capabilities into actual returns in the form of sales growth. The associated technological advantages often remain unexploited, and digital product innovations frequently fail. Building on the resource‐based view of the firm and the demand‐side perspective, we theorize that there is a need for complementary capabilities that integrate heterogeneous customer demands, thus, allowing firms to capture more value from smart products. We empirically investigate the mediating role of smart customization capability on the relationship between digitalization capabilities and sales growth. Moreover, we argue that this relationship is further strengthened by integrating information and data across sales and service channels (i.e., channel integration). We test and find support for our hypotheses based on a dataset comprising survey and archival data of 136 smart product manufacturers in Austria, Germany, Switzerland, and the United States. In doing so, we enhance the theoretical understanding of resource and capability configurations needed for digital transformation in general and smart product success in particular. We further update the traditional concept of mass customization by showing how customization with smart products helps manufacturing firms provide personalized solutions at scale.
ISSN:1540-5885
0737-6782
1540-5885
DOI:10.1111/jpim.12680