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PurposeSmart Manufacturing (SM) lies at the core of Industry 4.0. Operations management research has identified several factors influencing firms’ ability to adopt SM. However, a clear understanding of capabilities needed to progress in SM is still missing. This paper aims to investigate how absorptive capacity (AC) allows firms to advance in SM and explore how managerial antecedents support the capacity to absorb SM-related knowledge at different stages of SM adoption.Design/methodology/approachThis study adopts an exploratory approach through multiple case studies. Twelve firms, operating as part of the automotive supply chain and exhibiting different stages of SM adoption, constitute the sample.FindingsThe results suggest that advancement in SM requires firms to progressively reinforce their AC. Firms’ ability to acquire and assimilate SM knowledge is supported by managerial antecedents encompassing integrative capacities to bridge old and SM technologies, managerial cognition through the clear alignment of SM technologies with strategic goals and knowledge development capabilities through practices oriented to provide senior managers with SM competences.Originality/valueThe findings contribute to SM research by suggesting that AC is a crucial dynamic capability for SM adoption. The results also provide evidence-grounded recommendations to firms engaged in the digital transformation on the managerial capabilities needed to support AC and to progress from lower to higher stages of SM.

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PurposeSmart Manufacturing (SM) lies at the core of Industry 4.0. Operations management research has investigated the determinants of SM advancement but there is still limited understanding of the linkages between SM and organizational factors and about whether both the technological and organizational subsystems for SM are guided by firms’ competitive priorities. To close these gaps, building on operations strategy theory, this paper aims to empirically test a model positing that competitive priorities drive SM advancement. The relation between competitive priorities and SM advancement is assumed to be mediated by organizational microfoundations.Design/methodology/approachUsing data from a single respondent survey with 234 firms in the automotive component industry, structural equation modeling is adopted to test the model hypotheses. Relevant constructs are measured with reference to the lead plant for SM.FindingsFindings highlight that SM advancement is driven by the need to simultaneously compete in terms of cost, quality and delivery, thus suggesting that manufacturers view SM as a mean to develop multiple manufacturing capabilities. Organizational microfoundations fully mediate the relation between competitive priorities and SM advancement.Originality/valueResults have implications for SM research, as they provide an understanding of the strategic priorities of firms engaging in SM. Findings also bear relevance for manufacturing executives engaged in the SM transformation, as they provide quantitative evidence that shaping an adequate organizational environment is a prerequisite for SM advancement.