Analyzing the influence of smart and digital manufacturing on cost stickiness: A study of U.S. manufacturing firms

Farrukh Shahzad, Munir Ahmad, Muhammad Irfan, Zhenkun Wang and Zeeshan Fareed

International Review of Economics & Finance, 2024, vol. 95, issue C

Abstract: In the digital economy, smart and digital manufacturing has become an essential tool for firms to increase their industrial intelligence in recent years. This research uses data from U.S. manufacturing firms from 2011 to 2021 to investigate the effect of smart and digital manufacturing and its mechanism on firm cost stickiness. The findings demonstrate that the adoption of smart and digital manufacturing negatively impacts a firm's cost stickiness, suggesting that the adoption of smart and digital manufacturing has a deterrent effect on cost stickiness. Mechanism test results show that smart and digital manufacturing primarily lowers the cost stickiness of businesses by enhancing resource allocation effectiveness and improving information processing capabilities. Smart and digital manufacturing has a significantly stronger inhibitory effect on cost stickiness compared to collaborative smart and digital manufacturing modes. According to the examination of heterogeneity variables, firms with higher staff knowledge levels and non-SOE status experience a more pronounced inhibitory effect of smart and digital manufacturing on their cost stickiness. The value effect analysis indicates that smart and digital manufacturing eventually increases a company's present and future performance, enhancing long-term value by reducing cost stickiness. This study offers guidance and insights for the development of firm operational strategies and the promotion of national industrial intelligence policies.

Keywords: Digital economy; Smart and digital manufacturing; Cost stickiness; Information channels; Efficiency channels (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:reveco:v:95:y:2024:i:c:s1059056024004659

DOI: 10.1016/j.iref.2024.103473

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