The Role of Information Technology, Business Networks and Adoption of Manufacturing Automation in Manufacturing Efficiency

Abstract

This study reports the results of an empirical research investigating the relationships between manufacturing efficiency and (a) adoption of the manufacturing automation, (b) business network and (c) managerial use of the information technology in Indonesian manufacturing organisations. A comprehensive review of the relevant literature reveals that previous researchers have investigated the relationship between manufacturing organisations' performance and their adoption of manufacturing automation. However, although the extant literature suggests that manufacturers' engagement in business network and managerial use of information technology could play an important role in the above relationship, the relevant previous studies did not consider the role of these variables. The current study addresses the above-mentioned gaps in the literature. It has done so by empirically investigating the effect of Indonesian manufacturing organisations' adoption of the manufacturing automation, engagement in the business network and managerial use of the information technology on their manufacturing efficiency. The sample of the study consists of 104 manufacturing organisations, which operate in Java Island, Indonesia. One manager in charge of one business unit of each of the 104 manufacturing organisations participated in this study. The results indicate that adoption of the manufacturing automation and engagement in the business network are indirectly associated with manufacturing efficiency through managerial use of the information technology.