The Strategic Orientation of Internet of Things Utilization and Firm Performance: An Empirical Investigation of Korean Firms

Abstract

This study investigates the differential impact of internal-oriented versus external-oriented Internet of Things (IoT) technology utilization on firm performance. While IoT technology has been widely adopted across various industrial domains, its strategic deployment may yield varying outcomes depending on the orientation of implementation. Using panel data of 571 Korean firms from 2017 to 2022, this research conducts an empirical analysis to examine the relationship between orientation of IoT utilization and firm performance. The findings demonstrate that firms adopting IoT technology for external-oriented purposes, such as sales strategy and marketing, experience significantly higher performance compared to those primarily focused on internal operational efficiencies, including product development, production processes, and organizational management. Robustness checks using Return on Assets (ROA) reveal that while the effect remains positive, it is not statistically significant, suggesting that external-oriented IoT's value creation mechanism operates primarily through capital efficiency rather than asset-based returns. The results indicate that IoT's strategic value is most effectively realized when leveraged to enhance customer interactions and market responsiveness, transcending mere internal optimization to become a tool for competitive advantage. These insights provide valuable implications for strategic technology deployment decisions and highlight the importance of market-facing IoT applications in driving superior firm performance.