The Interplay Between Digital Manufacturing and Dynamic Capabilities: An Empirical Examination of Direct and Indirect Effects on Firm Performance

Purpose The purpose of this paper is to identify and empirically examine the dynamic capabilities that drive the development of digital manufacturing capabilities (DMC) and the role of DMC in mediating their influence on firm performance. Design/methodology/approach Based on the dynamic capabilities view (DCV) of the firm, we develop a set of hypotheses that are tested through a survey of 110 managers in the manufacturing sector. The hypothesized model is tested through structural equation modeling (PLS-SEM). Findings The results indicate that although higher-order dynamic capabilities have a strong influence on firm performance, their effects are partially mediated by the digital manufacturing capabilities that they generate, by positively affecting the extended production process. Practical Implications Our analysis contributes to a better understanding of the interplay between levels of the dynamic capabilities hierarchy by finding that digital manufacturing capabilities play an important role in translating higher-order dynamic capabilities into enhanced firm performance. Originality By complementing the dynamic capability view with the disruptive innovation theory in a specific fast changing context, this study introduces a new construct (DMC) providing an original and considerable contribution to the literature. To the best of our knowledge, it is the first empirical study that includes and assesses all these elements together in the context of the manufacturing industry.