Innovation and Industry4.0 in Japanese SMEs

This study aims to conduct an empirical analysis to identify the factors affecting SMEs' (Small and Medium-sized Enterprises) decisions to adopt Industry 4.0, such as cloud computing, AI (Artificial Intelligence), and IoT (Internet of Things). Industry 4.0 is expected to be cutting-edge and influence various processes of production, distribution, marketing, R&D, etc. The data set for our research is the "Questionnaire on Innovation Activities in Small and Mid-Size Manufacturing Industries," conducted by the Kinki University Institute of Management Innovation and the Osaka Bureau of Industry. The main results are: (1) Using legacy systems, particularly sales management systems, production management systems, and accounting systems, impacts the current usage of Industry 4.0(e.g., cloud computing, AI, and IoT). (2) The attention to customer needs promotes Industry 4.0. (3) Internal information sharing and corporate culture in which people freely express their views at meetings are linked to AI. To consider the current usage of Industry 4.0 as a new phenomenon, legacy systems, customer orientation, information sharing, and corporate culture are considered antecedents. (4) The current usage of cloud computing leads to considering the future adoption of AI and IoT. Cloud computing is thought to be one of the crucial determinants of adopting AI and IoT.