Digital innovation and performance of manufacturing firms: An affordance perspective

We explore the underlying mechanisms and institutional conditions of profiting from digital innovation in the context of manufacturing firms. Building on affordance theory, we propose that digital innovations positively affect manufacturing firms’ performance via innovation speed and operational efficiency due to the affordance of digital technology. Moreover, the interactions between digital and institutional affordances suggest that the intellectual property rights (IPR) protection system (i.e. IPR regime and its enforcement) negatively moderates the relationship between digital innovation adoption and innovation speed, as well as operational efficiency. Results from a longitudinal sample of Chinese listed firms support our hypotheses. Our findings contribute to the emerging literature on profiting from digital innovation and provide managerial implications for manufacturing firms in emerging markets.