The Role of Governments in Driving Industry 4.0 Adoption in Emerging Countries

Abstract

Industry 4.0 contributes to the virtualization of production system and enhances capabilities. However, the adoption process poses substantial challenges for SMEs in emerging markets due to institutional voids, resources, and public supports. This study explores the role of government in adopting Industry 4.0 by the SMEs and how organizational structure influences the process. It employed a quantitative approach and surveyed 225 managers. Industry 4.0 adoption is significantly influenced by government policy and subsidies. Government policy and subsidy transform organizational structure to be more transparent and flexible, streamlining them in adopting Industry 4.0. The organizational structure substantially mediates the relationships between government policy, subsidy, and Industry 4.0 adoption. This study implies that governments are vital in helping SMEs to adopt Industry 4.0 in emerging markets. Thus, governments should make policies that support technology adoption by offering sufficient funding/subsidies to boost innovation and technological transformation.