The effect of virtual reality-enabled manufacturing practices on production efficiency

Yangchun Xiong, Hugo K.S. Lam*, Sahar Karimi

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

Abstract

Firms have been increasingly adopting virtual reality (VR) technologies for manufacturing purposes, but it is still unclear whether and how such VR-enabled manufacturing practices (VRMPs) can help firms improve production efficiency. Analyzing a sample of 87 US treatment firms that have adopted VRMPs and 87 matched control firms without such adoption over the period of 2010–2020, our difference-in-differences estimation suggests that the treatment firms gain more production efficiency improvement when compared with the matched control firms. We also find that the production efficiency improvement arising from VRMPs is more pronounced for firms facing high levels of labor volatility and market dynamism. Our additional analysis further suggests that applying VR technologies into different manufacturing stages and in different industrial sectors can result in different degrees of production efficiency improvement. Overall, our study demonstrates the positive effect of VRMPs on production efficiency but also reveals how the effect can vary across firms depending on their operating environments, VR application fields, and industrial sectors.

Original languageEnglish
Article number109288
Number of pages15
JournalInternational Journal of Production Economics
Volume274
Early online date28 May 2024
DOIs
Publication statusPublished - Aug 2024

Bibliographical note

Publisher Copyright:
© 2024 Elsevier B.V.

Keywords

  • Difference-in-differences model
  • Manufacturing practices
  • Production efficiency
  • Virtual reality

Cite this