The adoption of industrial digital technology in UK manufacturing SMEs

Centre for International Business at the University of Leeds

Dr Hanh Pham is an Assistant Professor in the International Business Department at Leeds University Business School. Her research interests are: Industry 4.0 technology and digital economy, value creation and capture; capability building of SMEs in global value chains; corporate strategy, CSR and corporate governance of MNEs; inward & outward FDI; R&D, technological progress and sustainable development.

Person on laptop with mechanic arm in the background

Industrial digital technologies (IDT) are radically transforming the manufacturing landscape.  The integration of IDTs into manufacturing promises to yield a production ecosystem that is drastically more flexible, efficient, and responsive.

To this end, the adoption of IDTs, such as the industrial internet of things (IoTs), big data analytics, AI (Artificial Intelligence), virtual reality, and digital twins (virtual models designed to test how a product or system will perform), have already had a big impact on UK manufacturers and will continue to do so in the near future. Moreover, IDTs will most certainly not only impact the UK business ecosystem, but the global economy as a whole, and will therefore offer promising opportunities to improve the position of UK manufacturers within global value chains.

This impact extends to UK SMEs, particularly exporters, as these SMEs are more exposed to the pressures and opportunities of international competition. Therefore, a pressing question that emerges in relation to the diffusion of IDTs among UK manufacturers is around the potential benefits and challenges that IDT adoption has brought to UK SME export manufacturers, especially whether the adoption of IDTs has impacted their performance in international markets.

IDT adoption has brought a number of benefits to UK export SME manufacturers. For example, the implementation of industrial IoTs has enabled adopting SMEs to monitor and thereby optimise the efficiency of their production processes.

However, IDT adoption has for SMEs also brought with it a number of unique challenges. Many of these challenges stem from the relatively resource-constrained (compared to larger firms) and risk-averse nature of SMEs. The result of these factors is that adoption of IDTs among SMEs has been relatively low. This challenge is especially pressing for exporting SMEs, who risk becoming internationally less competitive compared to successful IDT adopters.

Therefore, it is essential to put forward a strong and unambiguous business case for IDT adoption to SMEs, particularly exporters. To this end, our research team has conducted a robust analysis of data collected from a focus group study of SMEs, practitioners, and policymakers, a series of interviews with UK manufacturing SME managers, and a survey of 302 UK export manufacturing SMEs, exploring the above topics. The key findings of the project and successful SME manufacturing case firms in their digitalisation journeys will be presented at an upcoming workshop.  

Hosted by Leeds University Business School and funded by InterAct, MadeSmarter, ESRC and UKRI, the workshop will be held on Thursday 13 July 2023, 10:00 – 13:00 at University House, University of Leeds. Attendees can join the workshop online if they are unable to attend the event in-person.

The event will bring together businesspeople, practitioners, policymakers, and academics to discuss the research findings of IDT adopting practices of many UK manufacturing SMEs, and implications for business strategies and government policy interventions. It is an excellent opportunity for manufacturing SMEs to learn about the latest trends and best practices for successfully implementing digital technology in the manufacturing industry.

The workshop will feature expert speakers and interactive sessions to help attendees better understand the benefits and challenges of adopting digital technology in their businesses.

View the workshop agenda and register for the free event.

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The views expressed in this article are those of the author and may not reflect the views of Leeds University Business School or the University of Leeds.