The Role of Dynamic Capability in Industry 4.0 Adoptions in Developed vs. Developing Countries: Implications to Operational and Innovation Performance

This article studies the mediating role of dynamic capability (DC) in Industry 4.0 (I4.0) adoptions and its effect on manufacturers’ operational and innovation performances, based on the microfoundational theoretic view of DC. Based on the survey of 213 manufacturers from six countries (three developing and three developed countries) that appeared in the top quartile of the 2021 Global Manufacturing Risk Index, we validated the proposed model empirically through structured equation modeling. Our results imply that I4.0 adoptions indicate higher innovation performance among manufacturers in developed economies and higher operational performance among manufacturers in developing economies. In both cases, DC mediated the effect. On the other hand, I4.0 adoptions show no significant impact on innovation performance in developing countries and operational performance in developed countries. The article posits that in a deliberate effort to exercise the DC, manufacturers reap a higher harvest of I4.0 investments, which differs based on economic contexts. Consequently, this enables operational excellence in developing countries and innovation leadership in developed countries.