Digitalization of manufacturing process and open innovation: Survey results of small and medium sized firms in Japan

Digitalization has a transformative impact on innovation in firms and industry. In this paper, the results of the Survey on the Changing Nature of Manufacturing Processes and New Product Development are presented to show how the nature of Japanese SMEs in manufacturing industry is changing in the new IT era (AI, big data and IoT). It is found that a firm applying new IT, such as data analytics by machine learning, is likely to be involved in delivering digital services as well as new products (servitalization) and innovation ecosystem, interacting with multiple firms. Such firms address wider customer needs, instead of just meeting existing customer requirements, meaning that its product innovation is likely to happen in new business fields. In addition, a firm which extensively uses its customer data gains more sales and profit contributions from its new product.