Lean tools and Industry 4.0 technologies: a multidimensional analysis of firm performance

Purpose This study aims to examine how Lean/Lean Six Sigma (LSS) tools and Industry 4.0 (I4.0) technologies relate to firm performance across multiple dimensions and time horizons. Prior research has focused predominantly on productivity; the authors extend this view to profitability, capital structure, financing conditions and internationalization, distinguishing between short- (2020–2022) and long-term (2012–2022) performance effects. Design/methodology/approach Using survey data from 140 industrial firms in inland Portugal, Lean/LSS and I4.0 constructs were modeled through a parcel-based measurement approach and estimated using Structural Equation Modeling with robust maximum likelihood. Performance indicators were derived from secondary accounting data, expressed as short- and long-term deltas. The structural model incorporates a theoretically grounded performance cascade linking productivity, return on assets, indebtedness, interest rate and internationalization. Findings Lean/LSS and I4.0 technologies exhibit strong complementarity, yet neither shows direct effects on short- or long-term financial performance indicators. Instead, performance evolves through a powerful internal propagation mechanism: productivity improvements drive increases in return on assets, which in turn reduce indebtedness. This cascade is significant in the short term and substantially stronger over the long term, explaining up to 91.5% of long-term return on assets variance and 62% of long-term indebtedness variance. Downstream effects on interest rate and internationalization remain non-significant. Originality/value By combining a multidimensional performance framework with explicit temporal differentiation and a performance to-performance cascade, this study clarifies how operational improvements translate, or fail to translate, into financial outcomes. Results show that the impact of Lean and I4.0 is indirect and unfolds primarily through internal financial propagation rather than direct effects on top-level accounting metrics. This contributes new empirical evidence on the temporal and structural mechanisms linking operational and digital transformation to firm performance and suggests that firms should adopt a long-term perspective, combining Lean and digital transformation initiatives while monitoring performance across multiple dimensions.