Developing Cyber-Physical Systems as Entrepreneurs: Agile Development in Startups and SMEs

As mechatronic systems evolve into cyber-physical systems (CPS) through IoT integration, start-ups face unique challenges in CPS development due to limited knowledge, resources, and time. Although they often adopt agile methods, this is typically done unconsciously. Prior research highlights four key problem areas: unclear entrepreneurial motivation, uncertainty in idea validation, resource-constrained prototyping, and low acceptance of tools and methods. Building on earlier exploratory studies, this paper presents a systematic literature review (SLR) of 1,929 papers to analyse CPS engineering practices across start-ups, SMEs, and large enterprises. We identify the types of CPS developed, compare engineering approaches, and propose a framework to classify CPS projects by organizational type and system level. The study outlines best practices and key requirements for successful CPS development and offers guidance to support tailored toolkits for diverse development contexts.