Developing capabilities underlying to Industry 4.0 design principles within the manufacturing context

Purpose Using a dynamic capabilities approach, the present study aims to identify and assess the effects of organizational determinants on capabilities underlying Industry 4.0 design principles, such as integration, virtualization, real-time, automation and servitization. Design/methodology/approach PLS-SEM enables a two-stage hierarchical latent variable reflective-formative model which was used for assessing the effect of organizational determinants on Industry 4.0 design principles. Five hundred six manufacturing companies constitute the effective sample, representing a population of manufacturing companies in an industrialized country. Findings The findings reveal that Industry 4.0 design principles extensively depend on digitalization resource availability. At the same time, companies that possess digitalization and change management capabilities tend to devote more resources to digitalization. Finally, the paper reveals that networking and partnership capability is the critical enabler for change management and digitalization capabilities. Practical implications The paper provides empirical evidence that the successful development of Industry 4.0 design principles and their underlying integration, virtualization, real-time, automation and servitization capabilities are resource dependent, requiring significant upfront investment and continuous resource allocation. Further, the study implies that companies with networking and partnership, change management and digitalization capabilities tend to allocate more resources for Industry 4.0 transformation. Originality/value Exclusively focusing on empirical research that reported applied insights into determinants of Industry 4.0 design principles, the study offers unique implications for promoting Industry 4.0 digital transformation among manufacturing companies.