The Strategic Role of Top Management Team (TMT) Digital Orientation in Digital Transformation of Manufacturing Industry

DOI

10.2991/aebmr.k.211207.016How to use a DOI?

Keywords

Top Management Team; Digital Orientation; Digital Transformation; Digitalization

Abstract

Indonesia’s manufacturing industry accounts about 20% of the country’s GDP, while the country has also an opportunity to capture a bigger share of global manufacturing activity. The major challenge is productivity. Thus, Indonesian manufacturing industry needs to step up its productivity through transformation that known as Industry 4.0. Meanwhile, the state-of-art of manufacturing industry also transforms network capabilities of 5G, the greater push for IoT, Industry 4.0, machine learning and predictive analytics. The emergence of the “digital age” fundamentally challenges the nature and functioning of multi-business firms, in terms of their corporate strategies as well as theory of the firm. Furthermore, the impact of the coronavirus disease (COVID‐19) pandemic is unprecedented. At a firm level, the crisis has been hugely disruptive and complex that requires further stimulated firms into action by increasing their awareness and action to accelerate digital transformation. Digital transformation has become a strategic imperative on leadership agendas, but there is lack of empirical research that examine how firms are digitally transformed. Digital transformation is fundamentally not about technology, but about strategy. It implies shifts in organizational structures and cultures, such as shifting to data-driven, new way of decision-making, interdisciplinary collaboration, agility, and improvisation. Amidst the digital transformation research, it is rare to find that focused on the strategic role the Top Management Team (TMT) as the main driver of the integrated process. The objective of our study is to explore the role of TMT digital orientation in optimizing digitalization, digital innovation capability, and business model innovation capability to achieve optimum firm performance. This study combines the dynamic capability and open innovation framework under the umbrella of resource-based view (RBV) theory relates to upper-echelon theory. We use structural equation model utilizes data from 195 of mid-to top- level managers in manufacturing industry in Indonesia. We find that TMT digital orientation plays a strategic role toward firm performance through digitalization, digital innovation capability, and business model innovation capability. Furthermore, our finding shows the key elements of TMT digital orientation are: 1) setting formal context of digitalization, 2) leading change, and 3) understanding digitalization. Our study contributes to the strategic management literature relates to the top managers’ contribution in the digital age, and its implications for strategy and organizational change, particularly the digital transformation in manufacturing industry.

Copyright

© 2021 The Authors. Published by Atlantis Press International B.V.

Open Access

This is an open access article under the CC BY-NC license.

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TY  - CONF
AU  - Muhyudi Muhyudi
AU  - Mira Maulida
AU  - Komang Aryasa
PY  - 2021
DA  - 2021/12/07
TI  - The Strategic Role of Top Management Team (TMT) Digital Orientation in Digital Transformation of Manufacturing Industry
BT  - Proceedings of the Conference Towards ASEAN Chairmanship 2023 (T-A-C 23 2021)
PB  - Atlantis Press
SP  - 103
EP  - 113
SN  - 2352-5428
UR  - https://doi.org/10.2991/aebmr.k.211207.016
DO  - 10.2991/aebmr.k.211207.016
ID  - Muhyudi2021
ER  -