The value of firm linkages in the age of industry 4.0: a qualitative comparative analysis

Abstract

AbstractOver the years, manufacturing in advanced economies has been the object of intense reorganization driven crucially by the international strategies of multinational enterprises (MNEs), and more recently, by technological disruptions powering a new manufacturing model, defined as Industry 4.0 (I4.0). This paper aims to explore firm-based, place-based and global drivers that can determine high levels of companies’ performance in the context of the emerging manufacturing model ‘I4.0’. In particular, our article tests the relative importance of and balance between three determinants of MNEs’ performance: (i) MNEs’ internal operations and R&D capabilities; (ii) reliance on local external economies and co-location with high-value service and technological competence; and (iii) the extent of MNEs’ production in terms of spread across global value chains. We empirically address this issue by surveying top managers of MNEs operating in four advanced manufacturing industries (biotech, engineering, fashion, and new materials) and located in five European countries (Germany, Italy, Spain, Sweden and the United Kingdom). We adopt fuzzy-set qualitative comparative analysis, a configurational, case-oriented approach. MNEs can be highly profitable when they follow different, but equally successful, paths. Our findings shed light on which balance between firm-based, place-based and global drivers positively impacts on companies’ performance in European advanced manufacturing sectors. In particular, we find that companies that collaborate with local suppliers of enabling technologies linked to I4.0 - with regard to the variety and intensity of collaborations- show high levels of performance. Policy implications are drawn in the concluding remarks.