Challenges and opportunities for manufacturing SMEs in adopting industry 4.0 technologies for achieving sustainability: Empirical evidence from an emerging economy

Climate change, resource efficiency, and global warming pose significant challenges to emerging economies and their small and medium-sized enterprises (SMEs). The concepts of sustainability and Industry 4.0 are intertwined and offer new business opportunities for SMEs. However, it remains unclear whether the adoption of Industry 4.0 technologies has any impact on sustainability at the process, system, and product levels, particularly for SMEs in emerging economies. Manufacturing SMEs currently face pressure from customers and stakeholder for shorter delivery times and environmentally friendly products to remain competitive in global market. While Industry 4.0 adoption is still in its early stages among SMEs, its potential influence on sustainability is anticipated. Consequently, emerging economies are increasingly focused on adopting Industry 4.0 technologies due to investments by multinational corporations. However, SMEs encounter challenges in adopting Industry 4.0 technologies and addressing sustainability issues in their business models. To bridge this gap, the present study conducts an empirical investigation in an emerging economy. A comprehensive review of the literature identifies the main challenges in Industry 4.0, which are validated through an exploratory factor analysis using responses from 233 manufacturing SMEs. The prioritization of challenges is accomplished using a Fuzzy-Analytical Hierarchy Process. The causal interrelationship between the major challenging groups is examined through the Fuzzy-Decision-Making Trial and Evaluation Laboratory approach. The findings highlight “Lack of dedicated Research and development (R&D) teams” and “Data security and privacy issues” as significant challenges faced by SMEs in emerging economies. This study represents an initial attempt to analyse the impact of Industry 4.0 challenges on achieving manufacturing sustainability in SMEs through a large-scale survey in emerging economies, employing a mixed-method approach. The results offer empirical support for addressing sustainability issues in Industry 4.0 for manufacturing SMEs. The framework developed in this study can be utilized by SME managers to effectively tackle sustainability challenges. Additionally, policymakers can leverage the study’s insights to promote sustainability in the manufacturing sector.