Adoption of Industry 4.0 with Cloud Computing as a Mediator: Evaluation using TOE Framework for SMEs

Muhammad Ramzul Abu Bakar - National Defense University of Malaysia, Kuala Lumpur, Malaysia
Noor Mat Razali - National Defense University of Malaysia, Kuala Lumpur, Malaysia
Khairul Khalil Ishak - University Shah Alam, Selangor, Malaysia
Mohd Nazri Ismail - National Defense University of Malaysia, Kuala Lumpur, Malaysia
Tengku Mohd Tengku Sembok - National Defense University of Malaysia, Kuala Lumpur, Malaysia


Citation Format:



DOI: http://dx.doi.org/10.62527/joiv.8.2.2205

Abstract


Industry 4.0 represents a significant shift in production processes, necessitating the integration of humans, products, information, and robots into digitalized workflows. While this transformation offers numerous benefits, its adoption, particularly among small and medium enterprises (SMEs), is hindered by various challenges such as financial constraints, maintenance costs, and a lack of digital culture and awareness. This study examines the adoption of Industry 4.0, specifically through cloud computing technologies, within the manufacturing and service sectors of SMEs in Malaysia. Cloud computing is economical, straightforward, and easily implemented for SMEs. We propose a conceptual model based on an extended Technology-Organisation-Environment (TOE) model, integrating refined constructs and considering digital organizational culture as a moderator, with cloud computing acting as a mediator to enhance firm performance. The study investigates the relationship between these constructs and addresses overlooked factors influencing adoption. Utilizing a structured questionnaire with 54 items derived from previous research, we employ partial least squares structural equation modeling (PLS-SEM) to analyze data collected from a pilot study. Our findings confirm the reliability and validity of the proposed conceptual model, meeting established criteria for composite reliability, average variance extracted (AVE), Cronbach's alpha, and discriminant validity (HTMT Criterion). Furthermore, this study presents empirical findings on technological, organizational, and environmental influences on adopting cloud computing. The insights gained from this research offer valuable guidance to enhance the performance of SMEs in the Industry 4.0 landscape.

Keywords


Cloud computing; small medium enterprise (SME); digital organisational culture; Technology-Organisation-Environment (TOE) Framework; SME performance

References


S. C. M. & Huawei, “Accelerating Malaysian digital SMEs,” SME Corp Malaysia, p. https://www.huawei.com/minisite/accelerating-malay, 2018, [Online]. Available: Digital technologies enabled by ICT infrastructures continue to influence enterprises and individuals alike, and their application among businesses is widespread. Digital transformation through these technologies improves the business landscape by creating

M. Armbrust et al., “A View of Cloud Computing,” Commun. ACM, vol. 53, pp. 50–58, 2010, doi: 10.1145/1721654.1721672.

S. Marston, Z. Li, S. Bandyopadhyay, J. Zhang, and A. Ghalsasi, “Cloud computing — The business perspective,” Decis Support Syst, vol. 51, pp. 176–189, 2011, doi: 10.2139/ssrn.1413545.

K. Witkowski, “Internet of Things, Big Data, Industry 4.0 – Innovative Solutions in Logistics and Supply Chains Management,” Procedia Eng, vol. 182, pp. 763–769, 2017, doi: 10.1016/j.proeng.2017.03.197.

S. Geissbauer, R., Vedso, J., & Schrauf, “Industry 4.0: Building the digital enterprise.” 2016.

R. Drath and A. Horch, “Industrie 4.0: Hit or Hype? [Industry Forum],” Industrial Electronics Magazine, IEEE, vol. 8, pp. 56–58, 2014, doi: 10.1109/MIE.2014.2312079.

J. Madison, J. Hayes, D. Keller, and N. Lombardo, “Combining systems engineering with Technology and Manufacturing Readiness Levels to advance research and development,” 2015, pp. 481–488. doi: 10.1109/SysEng.2015.7302801.

A. Abubakar, H. Chiroma, S. Muazc, and L. Ila, “A Review of the Advances in Cyber Security Benchmark Datasets for Evaluating Data-Driven Based Intrusion Detection Systems,” in Procedia Computer Science, 2015. doi: 10.1016/j.procs.2015.08.443.

D. Palka and J. Ciukaj, “Prospects for development movement in the industry concept 4.0,” Multidisciplinary Aspects of Production Engineering, vol. 2, pp. 315–326, 2019, doi: 10.2478/mape-2019-0031.

P. M. Mell and T. Grance, “SP 800-145. The NIST Definition of Cloud Computing,” National Institute of Standards &; Technology, Gaithersburg, MD, USA, 2011.

N. Tissir, S. El Kafhali, and N. Aboutabit, “Cybersecurity management in cloud computing: semantic literature review and conceptual framework proposal,” J Reliab Intell Environ, vol. 7, no. 2, pp. 69–84, 2021, doi: 10.1007/s40860-020-00115-0.

H. Gangwar, H. Date, and R. Ramaswamy, “Understanding determinants of cloud computing adoption using an integrated TAM-TOE model,” Journal of Enterprise Information Management, vol. 28, pp. 107–130, 2015, doi: 10.1108/JEIM-08-2013-0065.

R. Buyya, C. S. Yeo, S. Venugopal, J. Broberg, and I. Brandic, “Cloud Computing and Emerging IT Platforms: Vision, Hype, and Reality for Delivering Computing as the 5th Utility,” Future Generation Computer Systems, vol. 25, pp. 599–616, 2009, doi: 10.1016/j.future.2008.12.001.

Irmee Layo, “Cloud Computing Advantages for SMEs,” Cloud Times, 2013. https://cloudtimes.org/2013/09/18/cloud-computing-advantages-for-smes/ (accessed Dec. 28, 2021).

S. Palaniappan, “Cloud Computing for Academic Environment,” 2014.

I. Mikkonen and I. Khan, “Cloud computing : SME company point of view,” 2016.

Z. Wu, Z. Gao, Y. Cao, X. Ye, and J. Yang, “Tolerance Design and Adjustment of Complex Customized Product Based on Cloud Manufacturing,” Procedia CIRP, vol. 27, pp. 169–175, 2015, doi: 10.1016/j.procir.2015.04.061.

P. Gupta, A. Seetharaman, and J. Raj, “The usage and adoption of cloud computing by small and medium businesses,” Int J Inf Manage, vol. 33, pp. 861–874, 2013, doi: 10.1016/j.ijinfomgt.2013.07.001.

Y. Chan, “IT Value: The Great Divide Between Qualitative and Quantitative and Individual and Organizational Measures,” J. of Management Information Systems, vol. 16, pp. 225–262, 2000, doi: 10.1080/07421222.2000.11518272.

M. Gallivan, “Organizational adoption and assimilation of complex technological innovations: Development and application of a new framework,” DATA BASE, vol. 32, pp. 51–85, 2001, doi: 10.1145/506724.506729.

C. L. Iacovou, I. Benbasat, and A. S. Dexter, “Electronic Data Interchange and Small Organizations: Adoption and Impact of Technology,” MIS Q., vol. 19, pp. 465–485, 1995.

J. S. V. Florido, M. G. Adame, and M. A. O. Tagle, “Financial Strategies, the Professional Development of Employers and Performance of sme’s (AGUASCALIENTES Case),” Procedia Soc Behav Sci, vol. 174, pp. 768–775, 2015.

R. Singh, S. Garg, and S. G. Deshmukh, “Strategy development by SMEs for competitiveness: A review,” Benchmarking: An International Journal, vol. 15, pp. 525–547, 2008, doi: 10.1108/14635770810903132.

E. Duygulu, E. Ozeren, P. Işıldar, and A. Appolloni, “The Sustainable Strategy for Small and Medium Sized Enterprises: The Relationship between Mission Statements and Performance,” Sustainability, vol. 8, p. 16, 2016, doi: 10.3390/su8070698.

W. Ke and K. Wei, “Organizational culture and leadership in ERP implementation,” Decis Support Syst, vol. 45, pp. 208–218, 2008, doi: 10.1016/j.dss.2007.02.002.

SMECorporationMalaysia, “PKS dalam Normal Baharu: Membangun Semula Eknonomi,” 2021.

R. Kilmann, “Getting Control of the Corporate Culture,” Managing, pp. 11–17, 1982.

R. G. Owens and C. R. Steinhoff, “Towards a Theory of Organisational Culture,” Journal of Educational Administration, vol. 27, no. 3, Jan. 1989, doi: 10.1108/EUM0000000002462.

J. B. Barney, “Organizational Culture: Can It Be a Source of Sustained Competitive Advantage?,” Academy of Management Review, vol. 11, pp. 656–665, 1986.

E. H. Schein, Organizational Culture and Leadership. in The Jossey-Bass Business & Management Series. Wiley, 2010.

E. Martínez-Caro, J. Cegarra, and F. Alfonso-Ruiz, “Digital technologies and firm performance: The role of digital organisational culture,” Technol Forecast Soc Change, vol. 154, p. 119962, 2020, doi: 10.1016/j.techfore.2020.119962.

C. Padilha and G. Gomes, “Innovation culture and performance in innovation of products and processes: a study in companies of textile industry,” RAI Revista de Administração e Inovação, vol. 13, 2016, doi: 10.1016/j.rai.2016.09.004.

Daft R. L., Management. Orlando: The Dryden Press: Harcourt Brace College Publisher, 2010.

C. S. D. Jaques E., Executive Leadership. A Practice Guide to Managing Complexity. Wiley-Blackwell, 1994.

G. Wokurka, Y. Banschbach, D. Houlder, and R. Jolly, “Digital Culture: Why Strategy and Culture Should Eat Breakfast Together,” in Shaping the Digital Enterprise: Trends and Use Cases in Digital Innovation and Transformation, 2017, pp. 109–120. doi: 10.1007/978-3-319-40967-2_5.

N. Hoffman and R. Klepper, “Assimilating New Technologies: The Role of Organizational Culture,” IS Management, vol. 17, pp. 1–7, 2000, doi: 10.1201/1078/43192.17.3.20000601/31239.6.

L. G. Tornatzky, M. Fleischer, and A. K. Chakrabarti, Processes of technological innovation. Lexington books, 1990.

H.-F. Lin, “Understanding the Determinants of Electronic Supply Chain Management System Adoption: Using the Technology–Organization–Environment Framework,” Technol Forecast Soc Change, vol. 86, pp. 80–92, 2014, doi: 10.1016/j.techfore.2013.09.001.

S. Okai-Ugbaje, M. Uddin, A. Arshad, and A. Shah, “Cloud Computing Adoption Model for Universities to Increase ICT Proficiency,” Sage Open, vol. 4, 2014, doi: 10.1177/2158244014546461.

P. Ross and M. Blumenstein, “Cloud computing: The nexus of strategy and technology,” Journal of Business Strategy, vol. 34, 2013, doi: 10.1108/JBS-10-2012-0061.

L. Willcocks, W. Venters, and E. Whitley, “Cloud Sourcing and Innovation: Slow Train Coming: A Composite Research Study,” Strategic Outsourcing: An International Journal, vol. 6, 2013, doi: 10.1108/SO-04-2013-0004.

K. Kuan and P. Chau, “A Perception-Based Model for EDI Adoption in Small Businesses Using a Technology-Organization-Environment Framework,” Information & Management, vol. 38, pp. 507–521, 2001, doi: 10.1016/S0378-7206(01)00073-8.

L. Ardito, A. M. Petruzzelli, U. Panniello, and A. C. Garavelli, “Towards Industry 4.0,” Business Process Management Journal, vol. 25, no. 2, pp. 323–346, Jan. 2019, doi: 10.1108/BPMJ-04-2017-0088.

H. O. Awa, O. Ukoha, and B. C. Emecheta, “Using T-O-E theoretical framework to study the adoption of ERP solution,” Cogent Business and Management, vol. 3, no. 1, 2016, doi: 10.1080/23311975.2016.1196571.

J. D. Bryan and T. Zuva, “A Review on TAM and TOE Framework Progression and How These Models Integrate,” Advances in Science, Technology and Engineering Systems Journal, vol. 6, no. 3, pp. 137–145, 2021, doi: 10.25046/aj060316.

T. Oliveira, M. Thomas, and M. Espadanal, “Assessing the Determinants of Cloud Computing Adoption: An Analysis of the Manufacturing and Services Sectors,” Information & Management, vol. 51, 2014, doi: 10.1016/j.im.2014.03.006.

Y. Alshamaileh, S. Papagiannidis, and F. Li, “Cloud Computing Adoption by SMEs in the Norh East of England: A multi-perspective framework.,” Journal of Enterprise Information Management, vol. 26, 2013, doi: 10.1108/17410391311325225.

T. Lynn, X. Liang, A. Gourinovitch, J. Morrison, G. Fox, and P. Rosati, “Understanding the Determinants of Cloud Computing Adoption for High Performance Computing,” 2018. doi: 10.24251/HICSS.2018.489.

J.-W. (Allen) Lian, D. Yen, and Y.-T. Wang, “An Exploratory Study to Understand the Critical Factors Affecting the Decision to Adopt Cloud Computing in Taiwan Hospital,” Int J Inf Manage, vol. 34, 2013, doi: 10.1016/j.ijinfomgt.2013.09.004.

M. R. Abu Bakar, N. A. Mat Razali, M. Wook, M. N. Ismail, and T. M. Tengku Sembok, “The Mediating Role of Cloud Computing and Moderating Influence of Digital Organizational Culture Towards Enhancing SMEs Performance,” in International Visual Informatics Conference, 2021, pp. 447–458.

M. R. A. Bakar, N. A. M. Razali, M. Wook, M. N. Ismail, and T. M. T. Sembok, “Exploring and Developing an Industrial Automation Acceptance Model in the Manufacturing Sector Towards Adoption of Industry4.0,” Manufacturing Technology, vol. 21, no. 4, pp. 434–446, 2021, doi: 10.21062/mft.2021.055.

A. S. M. M. Hoque and Z. Awang, “Exploratory Factor Analysis of Entrepreneurial Marketing: Scale Development and Validation in The SME Context of Bangladesh,” Proceedings of the International Social Sciences and Tourism Research Conference 20-22 April 2016, no. April, pp. 22–38, 2016.

A. S. M. M. Hoque, Z. Awang, K. Jusoff, F. Salleh, and H. Muda, “Social Businecs Efficiency: Instrument Development and Validation Procedure using Structural Equation Modelling,” International Business Management, vol. 11, no. 1, pp. 222–231, 2017, doi: 10.36478/ibm.2017.222.231.

W. Chin, B. Marcolin, and P. Newsted, “A Partial Least Squares Latent Variable Modeling Approach for Measuring Interaction Effects: Results from a Monte Carlo Simulation Study and an Electronic-Mail Emotion/Adoption Study,” Information Systems Research, vol. 14, pp. 189–217, 2003, doi: 10.1287/isre.14.2.189.16018.

L. J. Cronbach, Test Validation, 2nd ed. Washington DC: American Council on Education.: R. Thorndike (Ed.), Educational Measurement, 1971.

J. Hair, G. T. M. Hult, C. Ringle, and M. Sarstedt, A Primer on Partial Least Squares Structural Equation Modeling. 2014.

J. Hair, B. Babin, and N. Krey, “Covariance-Based Structural Equation Modeling in the Journal of Advertising : Review and Recommendations,” J Advert, vol. 46, pp. 163–177, 2017, doi: 10.1080/00913367.2017.1281777.

B. M. Byrne, Structural equation modeling with Amos: Basic concepts, applications, and programming (3rd edition). 2016. doi: 10.4324/9780203805534.

N. Urbach and F. Ahlemann, “Structural equation modeling in information systems research using Partial Least Squares,” Journal of Information Technology Theory and Application, vol. 11, 2010.

J. F. Hair Jr., M. L. D. da S. Gabriel, and V. K. Patel, “AMOS Covariance-Based Structural Equation Modeling (CB-SEM): Guidelines on Its Application as a Marketing Research Tool,” ERN: Model Construction & Estimation (Topic), vol. 13, no. 2, pp. 44–55, May 2014, doi: 10.5585/REMARK.V13I2.2718.

J. F. Hair, B. J. Babin, and N. Krey, “Covariance-Based Structural Equation Modeling in the Journal of Advertising: Review and Recommendations,” J Advert, vol. 46, no. 1, pp. 163–177, 2017, doi: 10.1080/00913367.2017.1281777.

C. Fornell and D. F. Larcker, “Evaluating structural equation models with unobservable variables and measurement error.,” Journal of Marketing Research, vol. 18, pp. 39–50, 1981.

J. Henseler, C. Ringle, and M. Sarstedt, “A New Criterion for Assessing Discriminant Validity in Variance-based Structural Equation Modeling,” J Acad Mark Sci, vol. 43, pp. 115–135, 2015, doi: 10.1007/s11747-014-0403-8.

A. Gold, A. Malhotra, and A. Segars, “Knowledge Management: An Organizational Capabilities Perspective,” J. of Management Information Systems, vol. 18, pp. 185–214, 2001.

R. B. Kline, Principles and Practice of Structural Equation Modeling, Fourth Edition. in Methodology in the Social Sciences. Guilford Publications, 2015.

W. Nurhidayat, W. Muhamad, N. Afiza, and M. Razali, “Blockchain-based Data Sharing Acceptance Among Intelligence Community,” vol. 3, no. Tam 3.

W. Nurhidayat, W. Muhamad, N. Matrazali, K. Khalil Ishak, and S. Ramli, “Secure Blockchain-Based Data-Sharing Model and Adoption among Intelligence Communities.,” researchgate.net, 2021, Accessed: Jul. 30, 2023. [Online]. Available: https://www.researchgate.net/profile/Wan-Nurhidayat-Wan-Muhamad/publication/350089738_Secure_Blockchain-Based_Data-Sharing_Model_and_Adoption_among_Intelligence_Communities/links/605067a992851cd8ce445470/Secure-Blockchain-Based-Data-Sharing-Model-and-Adoption-among-Intelligence-Communities.pdf

Y. C. Yeong, K. S. Kalid, and S. K. Sugathan, “Cryptocurrency acceptance: A case of Malaysia,” Int J Eng Adv Technol, vol. 8, no. 5, pp. 28–38, May 2019, doi: 10.35940/ijeat.E1004.0585C19.

A. K. Shrestha and J. Vassileva, “User acceptance of usable blockchain-based research data sharing system: An extended TAM-based study,” in Proceedings - 1st IEEE International Conference on Trust, Privacy and Security in Intelligent Systems and Applications, TPS-ISA 2019, Institute of Electrical and Electronics Engineers Inc., Dec. 2019, pp. 203–208. doi: 10.1109/TPS-ISA48467.2019.00033.