External knowledge search, opportunity recognition and industry 4.0 adoption in SMEs

Technologies related to Industry 4.0 require Small and Medium Enterprises (SMEs) to understand their potential applications before they are adopted. In this paper, we test empirically a framework that links SME search strategies within their ecosystem (i.e., breadth of search vs. depth of search) to the capability of SMEs to recognise digital opportunities associated with Industry 4.0 (i.e., digital design, digital manufacturing and digital servitisation opportunities). We analyse a sample of 174 manufacturing SMEs operating in Italy. Our results illustrate the distinguishing traits of the knowledge search paths required to implement Industry 4.0 technologies in an SME manufacturing setting. In particular, they indicate that the recognition of digital opportunities in both product design and manufacturing processes require a depth of collaboration in the innovation process to capture firm and industry-specific company needs and to create mutual trust among the parties. Conversely, digital opportunities in the realm of product/service platforms require a breadth of search for SMEs to invest in different information technology layers to support the digitalisation of a product. We also find that all three groups of digital opportunities positively influence the extent of adoption of information and digital technologies (e.g., IoT, big data analytics, simulation). Our findings bring finer-grained evidence on how digital opportunities are linked with the adoption of the different types of Industry 4.0 technologies, reflecting the peculiar traits of manufacturing SMEs. Moreover, they show managers how to set specific collaboration strategies with the ecosystem according to the digital opportunities they are willing to pursue.