The influence of key components and digital technologies on manufacturer's choice of innovation strategy

The rapid development of digital technologies and intense market competition have compelled manufacturers to innovate traditional products (TPs) using digital technologies, aiming to create more innovative digital products (IDPs). In practice, the selection of digital technologies collaboration and innovation (DTCI) strategies by manufacturers is influenced by the quality of key components in TPs, the maturity of digital technologies, and the level of matching between them. However, current operations literature has provided limited insights into the underlying mechanisms of how these factors affect manufacturers' decision-making. In light of this, this study employs a game-theory approach to investigate how manufacturers can make optimal choices among three DTCI strategies: self-innovation, collaboration with incumbent suppliers or new suppliers. Different from previous studies, we propose a cooperative innovation strategy selection method based on key components and, digital technologies, as well as their matching degree. For the first time, we explore both the unidirectional and bidirectional matching scenarios. Our findings indicate that as the degree of unidirectional (bidirectional) matching increases, manufacturers are more inclined to choose self-innovation. An interesting finding is that, in the process of DTCI, manufacturers, as the leaders of digital technology cooperative innovation, do not possess a first-mover advantage.