Driving smartness for organizational performance through Industry 4.0: a systems perspective

PurposeThe internationalization of business has grown the production value chains and created performance challenges for industrial production. Industry 4.0, the digital transformation of industrial processes, promises to deliver performance improvements through smart functionalities. This study investigates how digital transformation translates to performance gain by adopting a systems perspective to drive smartness.Design/methodology/approachThis study uses qualitative research to collect data on the lived experiences of digital transformation practitioners for theory development. It uses semi-structured interviews with industry experts and applies the Gioia methodology for analysis.FindingsThe study determined that enterprise smartness is an organizational capability developed by digital transformation, it is a function of integration and the enabler of organizational performance gains in the Industry 4.0 context. The study determined that performance gains are experienced in productivity, sustainability, safety and customer experience, which represents performance metrics for Industry 4.0.Research limitations/implicationsThis study contributes a model that inserts smartness in the linkage between digital transformation and organizational outcomes to the digital transformation and production management literature.Practical implicationsThe study indicates that digital transformation programs should focus on developing smartness rather than technology implementations, which must be considered an enabling activity.Originality/valueExisting studies recognized the positive impact of technology on performance in industrial production. The study addresses a missing link in the Industry 4.0 value creation process. It adopts a systems perspective to establish the role of smartness in translating technology use to performance outcomes. Smart capabilities have been the critical missing link in the literature on harnessing digital transformation in organizations. The study advances theory development by contributing an Industry 4.0 value model that establishes a link between digital technologies, smartness and organizational performance.