The management of Industry 4.0 technologies and environmental assets for optimal performance of industrial firms in Malaysia

The integration of Industry 4.0 (I4.0) has emerged as an innovative paradigm for industrial firms contemplating environmental and economic issues. This study explicates the role of I4.0 technologies (I4.0TEC) in reinforcing the management of environmental assets (ENVASS) as well as optimizing financial performance (FP). The data in this research was collected from 738 industrial firms in Malaysia between 2009 and 2018. The analyses of ordinary least square statistics (OLS) and structural equation modeling (SEM) delineated three major findings. The individual effect of ENVASS, robotization, and flexibility in production technologies has a marginal impact on sales, exports, and labor productivity indicators. The complementarities of these variables represent a similar effect on the performance indicators. The findings related to gross operating margin elucidate that ENVASS and I4.0TEC have neither individual nor complementarity effects. This was explained by developing a robust model by integrating ENVASS, I4.0TEC, spending and investing in R&D, flexibility in production, and human capital management. Our findings have confirmed that the proposed model offers a functional toolkit for the firms considering optimizing their profitability by leveraging ENVASS and I4.0TEC. This research also contributes to developing an ethical business model for the circular economy.