Smart factory performance and Industry 4.0

Abstract

Existing literature on the Industry 4.0 concept does not empirically verify if, how, and for which types of firms, a greater openness to enabling technologies of Industry 4.0 provides further opportunities.This study analyzes the causal relationship between this degree of openness and performance, with an empirical analysis based on a sample representing local manufacturing units.Performance is measured by the extent of opportunities businesses obtain.The degree of openness is investigated using two indicators: breadth, or the number of technologies used; and depth, or the number of value chain stages involved.The regression models demonstrate that: (1) breadth and (2) depth of Industry 4.0 allow greater opportunities, and (3) micro-level local units achieve best performances.Verifying the opportunities for companies with Industry 4.0 is extremely relevant, as investments in Industry 4.0 are high in terms of costs, the acquisition of new skills, and the risks of obsolescence to enable better strategic decisions.This work also provides a scope for future analyses of this topic conducted on panel data.Despite the limited application of Industry 4.0, this study's results can encourage managers and policymakers to implement a wider range of enabling technologies in the various stages of the value chain.