How does digital enablement affect product customization? The roles of innovation capability and network embeddedness

Product customization has become increasingly important in satisfying the personalized needs of customers. In parallel, digital technology has widely permeated this transformation, and its positive effects on improving the efficiency and adaptability of customization are suggested by the limited literature. However, how digital technology enables customization needs further examination. Leveraging the lens of the capability hierarchy view and social network theory, this study explores the effects of digital enablement on product customization, and the roles of innovation capability and network embeddedness. The survey data collected from 148 manufacturing firms were analyzed through hierarchical multiple regression. The findings show the importance of digital enablement as an operation capability for product customization, and reveal that innovation capability partially mediates the effect of digital enablement. Both structural embeddedness and relational embeddedness strengthen the effect of digital enablement on product customization. This study contributes to the literature on digitally enabled customization by revealing the capability hierarchies in this field and by validating the impacts of the interplay between digital enablement and network embeddedness on product customization. This study carries practical implications for how best to leverage digital technology in order to develop capabilities for product customization.