IR4.0 readiness model for SMEs: A cross-sector analysis in Malaysia

• Standardized Assessment Tool: Developed and validated a web-based IR4.0 readiness tool tailored for SMEs, applicable across diverse sectors. • Core Dimensions: Evaluated readiness using five core dimensions—Organizational, Data, Infrastructure, Analytics, and IT, Development & Operations. • Sector-Specific Insights: Identified sector-specific gaps, with high-performing sectors like Services and Manufacturing and weaker sectors like Agriculture and Mining. • Scalability and Adaptability: The tool’s design ensures its applicability to various industries, supporting SMEs in their digital transformation journey. • Actionable Recommendations: Provides SMEs with practical insights to identify gaps, prioritize improvements, and align strategies with IR4.0 objectives. The Industrial Revolution 4.0 (IR4.0) introduces transformative technologies like the Internet of Things (IoT), Artificial Intelligence (AI), and Blockchain, offering small and medium enterprises (SMEs) opportunities to revolutionize operations and competitiveness. However, existing IR4.0 readiness assessment tools are manufacturing-centric, time-consuming, and lack adaptability across sectors. This study aims to develop a novel, web-based self-assessment tool that enables Malaysian SMEs across both manufacturing and non-manufacturing sectors to evaluate their IR4.0 readiness independently and efficiently. To date, no such self-evaluation system exists in Malaysia that empowers SMEs to independently assess their IR4.0 readiness without the need for third-party audits. Unlike prior tools, this system integrates recommendations for training and funding, enhancing both usability and actionability. A three-phase methodology was applied. The initial phase involved a systematic literature review of 10,428 articles, filtered to 13 high-quality studies, and qualitative content analysis, which identified 23 readiness items within five dimensions: Organizational, Data, Infrastructure, Analytics, and IT, Development, and Operations. Field observations from IR4.0 programs further contextualized these factors. The second phase focused on model design and tool development, incorporating expert-weighted scoring through a Delphi process and automated recommendations for national support programs. In the final phase, the tool was tested with 52 SMEs and validated through interviews with Malaysian industry experts. Findings show an average readiness of 69%, with gaps in infrastructure, analytics, and organizational commitment. The study concludes by offering an empirically grounded, sector-neutral tool that benchmarks SME digital readiness and informs both enterprise strategies and policymaking.