Technology isn't enough for Industry 4.0: on SMEs and hindrances to digital transformation

Abstract

Despite a general lack of examples showcasing seamless implementation of industry 4.0, talks of a human-centric, resilient, and sustainable industry 5.0 have already begun. But are the managers and workers of manufacturing enterprises today even ready for that? Digital transformation is still slow-going, especially within small- and medium-sized companies. Supported by an existing framework and interpretive structural model for digitalisation, we argue that a big part of digital transformation depends on the workers' competencies. Guided by the research question: How can the approach to competence development in SMEs explain patterns of slow digital transformation?, we investigate 30 manufacturing SMEs pursuing digitalisation. While manufacturing companies are aware of the need for additional competencies, few are actively working towards obtaining them. We expand on a theoretical model for smart manufacturing determinants and argue how a scaffold is needed to support SMEs in the early stages of digitalisation to increase understanding of core concepts, i.e. Industry 4.0 concepts and available technologies, data handling, integration capability, upskilling and training, and strategic management capabilities. We propose that a scaffolding approach to competence development can enable knowledge acquisition and the formation of digital transformation strategies.