**4.2. Methodology**

### *4.2.1. Sample*

The definition of a high-technology industry has not been agreed upon. The Department of Commerce (USA) [36] defines a high-technology industry on the basis of the percentage of its investment in R&D relative to its sales revenue. Although MNCs in the manufacturing sector outnumbered other types, this study chose to include all types of firms within this subsector: multinational corporations (MNCs), joint ventures (JVs), foreign-owned (FO) and locally owned (LO). The further classification of firms was inspired by Thomas and McGee [21] who define firms in terms of modes of innovation: 'mode 1 as small high technology firms, mode 2 as large multi-product, multi-market, and multi-divisional corporations and mode 3 as huge multinational enterprises that usually involve public and private sector collaboration on missionoriented programs' (p. 266).

There were a total of 380 E&E firms listed in the Federation of Manufacturing Directory. However, about 80 of these were incorporated after the date this research was carried out, so they were excluded, leaving about 300 high-technology manufacturing firms for the survey. This sample was considered as a probable one, and it was thus possible to 'extrapolate beyond the sample to establish findings for the wider population of interest' ([37], p. 184).

Because of their familiarity with technology management and strategy issues in their firm, the CEO, technology managers or senior management of each firm was expected to complete the questionnaire.

#### *4.2.2. Research design*

In this study R&D is considered as an integral part of a firm's strategy and is employed as a background variable to determine its relationship with the performance of firms. Technology helps in the formulation of a company's technology strategy, and its implementation provides the success. This is the rationale to define strategic technology management as a combi-

'R&D has to live in continuous symbiosis with other functions in the company and should be absorbed into the technology function' [27]. This Strategic Management Conference [27] also recommended that firms need to 'measure the technological assets' so as to decide on how to

According to Van der Meer et al. [35], 'Companies which operate in technology intensive environments are compelled to invest heavily in R&D in order to maintain a competitive advantage'. This study, besides exploring the effect of technology strategy factors on success of firms, also explored if R&D investments in terms of the number of people employed in the R&D

'The promise that R&D holds is not the reality for many firms as competitors often appropriate and commercialise new technologies more nimbly than the firms that paid to develop them' [36]. Firms need to find a fit between their R&D and their company strategy. Evan et al. [22] suggest that technology strategy improves communication between R&D and the rest of

The definition of a high-technology industry has not been agreed upon. The Department of Commerce (USA) [36] defines a high-technology industry on the basis of the percentage of its investment in R&D relative to its sales revenue. Although MNCs in the manufacturing sector outnumbered other types, this study chose to include all types of firms within this subsector: multinational corporations (MNCs), joint ventures (JVs), foreign-owned (FO) and locally owned (LO). The further classification of firms was inspired by Thomas and McGee [21] who define firms in terms of modes of innovation: 'mode 1 as small high technology firms, mode 2 as large multi-product, multi-market, and multi-divisional corporations and mode 3 as huge multinational enterprises that usually involve public and private sector collaboration on mission-

There were a total of 380 E&E firms listed in the Federation of Manufacturing Directory. However, about 80 of these were incorporated after the date this research was carried out, so they were excluded, leaving about 300 high-technology manufacturing firms for the survey.

**1.** What is the fit between technology projects and the company strategy?

**2.** How do technology efforts compare with those of competitors?

**3.** Are external sources (universities, laboratories) used effectively?

nation of technology strategy and technology management.

use technology in making strategic choices.

100 Digital Transformation in Smart Manufacturing

the firm and seeks to answer questions like:

**4.2. Methodology**

oriented programs' (p. 266).

*4.2.1. Sample*

department related to the performance of the firms.

In order to address the research question, a mixed method design was used to collect data. Zahra [38] has indicated a 'need to refine the conceptual and operational definitions of technology strategy and … that field studies and surveys can help to identify additional components of technology strategy' (p. 214). The data-gathering phase had three objectives:


The research was designed in three phases. The first phase involved the development of a survey instrument. The survey instrument was developed in line with the objectives of the research and so as to maximise information extraction from the respondents ([39], p. 29). Advantage was taken of prior surveys in selecting the variables chosen for the study, especially Herman [40]. The response rate was initially 18%; this increased to 26.5% (useful rate being 20.7%) after two follow-up letters were sent. The second phase involved the pilot testing of the survey instrument. The pilot study involved 10 firms and sought to assess the clarity and usefulness of the questionnaire items. Phase three of the study involved the administration of the survey.

#### *4.2.3. Measures*

According to Jones et al. [9], 'Successful technology strategy management must go beyond content, implementation is as important' (p. 158). There are 10 elements of strategic technology management that were selected for this study. Each element is measured through inductively developed items in order to develop a richer description of the element and to triangulate on the element value. A four-point modified Likert scale was chosen due to its inherent advantages over the original odd-numbered Likert scale.

#### *4.2.4. Firm's performance dimensions*

In this study firm performance was measured using sales revenue growth (SRG), that is, by considering the annual sales revenue at the start and end of the period of this study. SRG reflects the effects of technology strategy decisions. Although SRG is not a perfect measure, various researchers have found it adequate for performance, especially for developing countries [41].

### **4.3. Data analysis**

#### *4.3.1. Factors underlying strategic technology management*

Factor analysis was used to reduce the original number of items (32 items, 16 strategy and 16 management) in the survey. The literature review identified several variables which could be used to measure two dimensions which define strategic technology management. These two dimensions are referred to as technology management (TM) and technology strategy (TS). A thorough analysis of the environment in which the survey was carried out revealed that 32 items could be used to measure these dimensions. According to the respondents to the pilot study, these items were deemed suitable for use in the main questionnaire.

**3.** This third factor relates to the extent to which *technology is embedded in plants and processes*. This construct relates to a firm's exploitation of technology to manufacture unique products, to reduce manufacturing costs and to increase the flexibility of production processes. This measure also reflects the maximisation of the inclusion of technology in a firm's plant

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The TM dimension, which relates to a firm's handling of the process side of technology, can

**1.** The first is *R&D linked to business*. This refers to the degree to which a firm links its R&D activities with its other business operations, that is, the degree to which it elevates R&D to a strategic level. It also relates to the existence of mechanisms—mechanisms for recognising and rewarding R&D and mechanisms for evaluating the costs and benefits of specific

**2.** The second factor is called *keeping abreast with emerging technologies*. This is about the processes that firms employ to ensure that they are aware of innovative and competing emerging technologies. This basically refers to the processes it has in place for scanning for new

**3.** The third factor is *formal process for planning*. This reflects the emphasis that firms place on using formal processes for planning and selecting technologies, as compared to *ad hoc*

**4.** The fourth factor is *in-country external acquisition of technology*. This is about the processes that firms use to acquire technology by conducting R&D in collaboration with universities, research labs and other companies within a country, that is, technology acquisition that

The seven strategic technology management factors highlighted above were evident in firms investigated. However, not all factors were found to contribute to a firm's success. The next

For this study, sales revenue growth (SRG) was used as a measure of firm performance and

The results revealed that there was a statistically significant correlation between *strategic R&D* and SRG, as well as between *technology positioning* and SRG. These two factors represent technology management and technology strategy dimensions of strategic technology management; thus, it could be stated that application of strategic technology management factors contributed to the positive performance of the advanced manufacturing firms during the 10-year period under review. The summary of the factors that correlated with success is

section describes in detail the relationship between these factors and SRG.

and processes in order to gain an advantage in relation to competitors.

be conceived in terms of four unique factors:

technologies employed by firms.

does not rely on internal R&D at the firm level.

*4.3.2. Factors influencing performance of firms*

was averaged over a 10-year period.

provided in **Table 1**.

R&D projects.

decision-making.

Principal component analysis (PCA) was selected for extracting the factors. In order to determine the appropriateness of the factor analytic framework, a number of methods were employed. These included Bartlett's test of sphericity and Kaiser-Meyer-Olsen's (KMO) test. The 16 strategy items were factor analysed using the PCA method.

Kaiser's criterion with an eigenvalue of greater than 1.0 was used to determine the number of factors to be extracted. The extraction using PCA for the 'technology strategy' variables revealed that three components accounted for 71.3% of the total variance. The extraction using PCA for the 'technology management' variables revealed that four components accounted for 83.2% of the total variance. The rotated factor loadings are presented in Appendix A.

Strategic technology management in this research has been understood in terms of the technology strategies formulated by firms and the processes for implementing or managing these strategies. Seven new factors have been identified by this research, and these all apply at the company level (Appendix A). These seven factors can be seen as falling into two dimensions: the technology strategy (TS) dimension and the technology management (TM) dimension.

The TS dimension, which refers to the *content* of strategies, is in this study and can be conceptualised in terms of three factors:


**3.** This third factor relates to the extent to which *technology is embedded in plants and processes*. This construct relates to a firm's exploitation of technology to manufacture unique products, to reduce manufacturing costs and to increase the flexibility of production processes. This measure also reflects the maximisation of the inclusion of technology in a firm's plant and processes in order to gain an advantage in relation to competitors.

The TM dimension, which relates to a firm's handling of the process side of technology, can be conceived in terms of four unique factors:


The seven strategic technology management factors highlighted above were evident in firms investigated. However, not all factors were found to contribute to a firm's success. The next section describes in detail the relationship between these factors and SRG.

### *4.3.2. Factors influencing performance of firms*

**4.3. Data analysis**

102 Digital Transformation in Smart Manufacturing

*4.3.1. Factors underlying strategic technology management*

egy items were factor analysed using the PCA method.

tualised in terms of three factors:

Factor analysis was used to reduce the original number of items (32 items, 16 strategy and 16 management) in the survey. The literature review identified several variables which could be used to measure two dimensions which define strategic technology management. These two dimensions are referred to as technology management (TM) and technology strategy (TS). A thorough analysis of the environment in which the survey was carried out revealed that 32 items could be used to measure these dimensions. According to the respondents to the pilot

Principal component analysis (PCA) was selected for extracting the factors. In order to determine the appropriateness of the factor analytic framework, a number of methods were employed. These included Bartlett's test of sphericity and Kaiser-Meyer-Olsen's (KMO) test. The 16 strat-

Kaiser's criterion with an eigenvalue of greater than 1.0 was used to determine the number of factors to be extracted. The extraction using PCA for the 'technology strategy' variables revealed that three components accounted for 71.3% of the total variance. The extraction using PCA for the 'technology management' variables revealed that four components accounted for 83.2% of

Strategic technology management in this research has been understood in terms of the technology strategies formulated by firms and the processes for implementing or managing these strategies. Seven new factors have been identified by this research, and these all apply at the company level (Appendix A). These seven factors can be seen as falling into two dimensions: the technology strategy (TS) dimension and the technology management (TM) dimension. The TS dimension, which refers to the *content* of strategies, is in this study and can be concep-

**1.** The first is *technology positioning*, in which a firm introduces high-risk or breakthrough technologies in order to build a reputation for technical innovation that it can be used as a competitive advantage. A firm that uses *technology positioning* also emphasises the sophistication of the technology they apply, with an emphasis on state-of-the-art tools and equipment and a focus on hiring highly trained R&D personnel. Such a firm strives to not only increase its range of products but also to reduce product development time. Thus, this factor could be summarised as referring to a firm's utilisation of technology to achieve competitive advantage. It does so by using even more sophisticated technology and by

**2.** The second factor developed from the data is that of *leading in the discovery of new technologies and introducing innovative products*. This factor relates to the efforts a firm puts into the *discovery* of new technologies and to introducing new products before other firms. Thus, it is about the willingness to lead in technology discovery and in the introduction of new products.

study, these items were deemed suitable for use in the main questionnaire.

the total variance. The rotated factor loadings are presented in Appendix A.

increasing the number and rate of development of new products.

For this study, sales revenue growth (SRG) was used as a measure of firm performance and was averaged over a 10-year period.

The results revealed that there was a statistically significant correlation between *strategic R&D* and SRG, as well as between *technology positioning* and SRG. These two factors represent technology management and technology strategy dimensions of strategic technology management; thus, it could be stated that application of strategic technology management factors contributed to the positive performance of the advanced manufacturing firms during the 10-year period under review. The summary of the factors that correlated with success is provided in **Table 1**.


technology (R&D) and human ingenuity (key positioning/decision-making) can provide success to firms. Thus, smart manufacturing is the engine, and strategic technology management

Influence of Strategic Technology Management on Smart Manufacturing: The Concept of…

**Component Initial eigenvalues Extraction sums of squared loadings Rotation** 

**Total Percentage** 

**of variance**

**Cumulative (%)**

1 8.261 51.632 51.632 8.261 51.632 51.632 7.383 2 1.755 10.968 62.600 1.755 10.968 62.600 3.750 3 1.388 8.677 71.277 1.388 8.677 71.277 4.769

**sums of squared loadingsa**

**Total**

**Cumulative (%)**

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105

the driver for performance of firms.

**A. Appendix A: factor analysis**

**Total Percentage** 

 .987 6.167 77.444 .784 4.903 82.347 .672 4.203 86.549 .457 2.853 89.403 .428 2.678 92.080 .324 2.025 94.105 .256 1.598 95.703 .192 1.199 96.902 .187 1.167 98.069 .113 .704 98.773 .089 .558 99.332 .071 .446 99.777 .036 .223 100.000

**of variance**

Extraction method: principal component analysis.

**A.1. Technology strategy**

**Total variance explained**

**Table 1.** Strategic technology management factors contributing to success.
