The Impact of Technological Innovation on Industry 4.0 Implementation and Sustainability: An Empirical Study on Malaysian Small and Medium Sized Enterprises

Small and Medium sized Enterprises (SMEs) are the pillars on which most of the economies worldwide rest. Without the support of qualified technological innovation, it will be very difficult for SMEs’ performance to improve and impossible for them to reach their sustainability goals. Small businesses should therefore be encouraged to embrace the next technological frontier, Industry 4.0 (I4.0). The main purpose of this research is to understand the relationship between the implementation of Industry 4.0 technologies and sustainability goals, along with an analysis of how innovation characteristics make implementing I4.0 easier for small businesses. To answer the research questions and analyse the high complex data, this research performed a structural equation model by using AMOS software. The results indicated that technology innovation characteristics have a positive significant effect on I4.0 implementation and sustainability goals. However, effective implementation of I4.0 mediates between the relationship of innovation characteristics and sustainability goals, except observability. The implications of this research are that SMEs should develop effective I4.0, implement it, and build innovation characteristics to reach sustainability goals