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TopIndustry 4.0 will likely disrupt the industrial environment and change how global value chain activities shape global production networks. The emergence of the Internet of things, cloud computing, big data analytics, and the cyber-physical system (CPS) have fostered the development of Industry 4.0 (Dalenogare et al., 2018; Reza, Malarvizhi et al., 2021). The CPS contributes to virtualizing the physical environment and changes the manufacturing paradigm from physical and human-centric to mechanized, flexible, and system-centric production. Policymakers, industrialists, and academics are increasingly preoccupied with this phenomenon (Chiarello et al., 2018; Liao et al., 2017). The approach includes integrating the manufacturing system into the product lifecycle and business operations for distribution networks (Dalenogare et al., 2018) and streamlining the organization’s entire value chain (Stock & Seliger, 2016). Industry 4.0 uses smart technologies to collect and analyze data in real-time and provide them to the industrial system with relevant information (Wang et al., 2016). The underpinning digital transformation through the evolution of Industry 4.0 offers numerous advantages for small and medium enterprises (SMEs) (Li et al., 2022). Some benefits include higher productivity, lower operating costs, better product quality, and product customization, which are crucial for SMEs’ competitiveness and survival (Moeuf et al., 2018).
Despite the advantages and competitive prospects of Industry 4.0, the complexity, ambiguity, advanced resource requirements, and skill intensity of digital transformation deprive SMEs of adopting Industry 4.0 (Horváth & Szabó, 2019). SMEs in emerging countries are privately owned and lack formalization of their legal status. They do not have adequate access to commercial lending and/or government support. Due to the novelty of Industry 4.0 and the lack of knowledge of this technological revolution, adequate public policy guidance and supports have yet to be developed. SMEs must have access to or build the essential procedures, tools, techniques, and knowledge to accelerate the digital transformation by adopting Industry 4.0 (Al-Azad et al. 2022; Colli et al., 2019; Müller et al., 2018). Public policy plays a significant role in speeding up Industry 4.0 adoption processes among SMEs. This technological innovation promises to bring back outsourced manufacturing activities to the home country and spur reindustrialization in high-cost countries. Many emerging countries with considerable manufacturing industries are now introducing government-supported Industry 4.0 initiatives to move towards high-tech manufacturing and attract foreign investors and strategic collaborations from developed markets. Such initiatives focus on overall strategic programming and promotion to develop a favorable environment for Industry 4.0, establishing a standard system and accelerating the transformation of organizational structure and flexibility towards adopting smart tools and technologies. The initiatives also include launching a wide-ranging broadband infrastructure, improving safety and security measures, reforming the work environment, developing human resources, and enhancing supply chain logistics (Zhou et al., 2015). These initiatives encourage SMEs to embrace new technologies for sustainable manufacturing, improving performance, and contributing to the nation’s sustainable development (Ramdani et al., 2021).