Diminishing Profitability? Technology Adoption Capability and Its Impact on Firm Performance: The Case Study of Distribution Firms in Indonesia

Author(s):

  • Rizki Raksanugraha1 (University of Indonesia, Indonesia)
  • Budi Soetjipto1 (University of Indonesia, Indonesia)
  • Setyo Wijanto1 (University of Indonesia, Indonesia)
  • Yuri Mansury1 (Illinois Institute of Technology, United States of America)

Abstract:
Motivated by the trend of decreasing profitability among Indonesian firms, this paper investigates the impact of key variables related to technology adoption capability and strategy execution–including technology assessment, incentive structures and control mechanisms, as well as information flow and decision-making authority–on the performance of firms within Indonesia's fast-moving consumer goods distribution sector. The empirical strategy employs a unique approach for data gathering by utilizing a micro-survey of 393 fast-moving consumer good distributor firms in Indonesia to analyze this relationship. This study enriches the continuing discussion of the service and cost trade-off in supply chain management. It proposes an alternative perspective where the roles of technology adoption capability and strategy execution are considered. The key findings suggest that firms can improve both service and cost simultaneously by maintaining a high level of technology adoption capability and ensuring robust strategy execution. Finally, this study may contribute to the ongoing scholarly debate on the impact of technology adoption on firm performance and enable practitioners to take appropriate action when strategizing technology adoption to improve performance.

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