Development and Validation of an Instrument to Measure the Perceived Benefits of Digitalization in Manufacturing

Abstract

Digitalization in manufacturing can help the firm to improve output and reduce costs. This work reports on the development, testing, and validation of an instrument to measure the perceived benefits of digitalization in manufacturing. The item was developed based on a comprehensive literature review and qualitative investigation from practitioners who are actively engaged in taking decisions/implementing digitalization in Indian manufacturing. Exploratory factor analysis of data from 234 practitioners yielded 5 factors of perceived benefits of digitalization in manufacturing: real-time monitoring, data governance, eco-positivity, resiliency and agility, and embedded/automated control. The results of confirmatory factor analysis on a different sample of 235 practitioners supported the stability of this 5-factor structure. The empirical results confirm the high reliability and construct validity of the newly developed instrument by achieving discriminant, convergent, nomological, and predictive validity. Furthermore, this research provides a self-diagnostic tool for manufacturing firms to assess the existing capability and prioritize digitalization efforts for maximum benefits over time.