Industry 4.0 implementation and Triple Bottom Line sustainability: An empirical study on small and medium manufacturing firms

BACKGROUND: The current level of industrialization has generated many challenges worldwide, including ecological hazards, climate change, and the overuse of non-renewable natural resources, thereby creating an increasing demand for achieving the goal of the Triple Bottom Line (TBL). In this regard, Industry 4.0 can be used as a crunch point to contribute to the production process that can help achieve sustainable development. PURPOSE: While the Malaysian government proposed the “Industry4ward” approach to enhance technological adoption, there is scarce empirical evidence in the literature that validates SMEs for Industry 4.0. Using Dynamic Capability View (DCV), this study proposes a framework that includes core determinants like top management commitment, supply chain integration, and IT infrastructure, that can significantly influence Industry 4.0 implementation toward achieving TBL sustainability. DESIGN/METHODOLOGY/APPROACH: Employing simple random sampling, the study adopted a quantitative approach based on 199 useable respondent's feedback collected through a survey questionnaire of 900 employees from Malaysian SMEs. The statistical analysis was performed using Structural Equation Modeling (Partial Least Square, SmartPLS 3.3.2). FINDINGS: The results show that top management and IT infrastructure significantly impact Industry 4.0 implementation and sustainability. In contrast, the analysis also demonstrates that supply chain integration is insignificant to Industry 4.0 implementation in SMEs. The findings also indicate that the relationship between the determinants of Industry 4.0 and TBL sustainability can be mediated by the “effective implementation” of Industry 4.0. RECOMMENDATIONS: The study highlights the practical consequences of the role and use of the determinants in Industry 4.0 implementation. Its findings help managers and policy-makers to optimize value creation to achieve sustainable development goals. LIMITATIONS AND FUTURE RESEARCH: Focusing only on Malaysian manufacturing SMEs may restrict the generalization of the study; thus, a benchmarking analysis from other industrial settings is encouraged. The questionnaire-based survey is a further limitation of the study.