Adoption of Industry 4.0 with Cloud Computing as a Mediator: Evaluation using TOE Framework for SMEs

Abstract

Industry 4.0 represents a significant shift in production processes, necessitating the integration of humans, products, information, and robots into digitalized workflows. While this transformation offers numerous benefits, its adoption, particularly among small and medium enterprises (SMEs), is hindered by various challenges such as financial constraints, maintenance costs, and a lack of digital culture and awareness. This study examines the adoption of Industry 4.0, specifically through cloud computing technologies, within the manufacturing and service sectors of SMEs in Malaysia. Cloud computing is economical, straightforward, and easily implemented for SMEs. We propose a conceptual model based on an extended Technology-Organisation-Environment (TOE) model, integrating refined constructs and considering digital organizational culture as a moderator, with cloud computing acting as a mediator to enhance firm performance. The study investigates the relationship between these constructs and addresses overlooked factors influencing adoption. Utilizing a structured questionnaire with 54 items derived from previous research, we employ partial least squares structural equation modeling (PLS-SEM) to analyze data collected from a pilot study. Our findings confirm the reliability and validity of the proposed conceptual model, meeting established criteria for composite reliability, average variance extracted (AVE), Cronbach's alpha, and discriminant validity (HTMT Criterion). Furthermore, this study presents empirical findings on technological, organizational, and environmental influences on adopting cloud computing. The insights gained from this research offer valuable guidance to enhance the performance of SMEs in the Industry 4.0 landscape.