Strategic Orientations and Digital Capability as Drivers Of Innovation Performance in Manufacturing Companies

Abstract

In the era of Industry 4.0, manufacturing firms face increasing pressure to enhance innovation performance while maintaining economic efficiency and sustainability. This study examines the influence of Technology Orientation, Economic Orientation, Digital Capability, and Sustainable Product Design on Innovation Performance. A quantitative approach was employed using Partial Least Squares Structural Equation Modeling (PLS-SEM) to analyse data collected from 159 manufacturing company respondents. The findings reveal that Technology Orientation significantly enhances Digital Capability, Economic Orientation, Sustainable Product Design, and Innovation Performance. Likewise, Economic Orientation positively affects both Sustainable Product Design and Innovation Performance, emphasizing the importance of financial discipline in supporting innovation-driven outcomes. Additionally, Digital Capability has a significant impact on Sustainable Product Design and Innovation Performance, underscoring the role of digital transformation in improving sustainability practices. However, Sustainable Product Design does not significantly influence Innovation Performance, indicating that sustainability-oriented design efforts may not always translate directly into higher innovation outcomes. These results highlight that integrating technology, economic focus, and digital capabilities is essential for achieving sustainable innovation and competitiveness in the manufacturing sector.