LAUSR

Abstract Industry 4.0 (I4.0) has gained a lot of consideration as it can address the challenges of today's dynamic manufacturing environment. This paper empirically examines whether environmental dynamism (ED) can drive firms to implement I4.0 technologies, and mediating effect of critical factors on this relationship. We adopt “Human-Organization-Technology” (HOT) theory to categorize the critical factors for I4.0. The paper also examines the effect of I4.0 on environmental and market performance. The proposed framework is tested by partial least squares (PLS) using the survey data from Indian manufacturing industries. The results show that ED drives firms towards I4.0, and positive effect of I4.0 on performance outcomes. Further, organizational and technological factors mediate the relationship between ED and I4.0. The findings can be useful for firms considering to make a transition towards I4.0. It can aid managers to formulate specific strategies for transitioning to I4.0, contribute towards sustainable development, and improve market performance.