Digitalization of operations for sustainable value creation by SMEs: analysis of barriers in the era of Industry 4.0

Purpose The digitalization of operations within small- and medium-sized enterprises (SMEs) remains a significant challenge, particularly in conceptualizing and assessing their readiness for such transformation in the context of Industry 4.0 (I4.0). While there is considerable literature on digitalization, limited attention has been paid to how SMEs can effectively create long-term value through digitalization. Hence, this study aims to identify the challenges for digitalizing operations and present an integrated framework to evaluate the level of preparation for I4.0 uptake for SMEs based on their capabilities to cross boundaries to create sustainable value. Design/methodology/approach The majority of critical barriers concerning digitalization of operations have been derived from the literature and decided upon through fuzzy Delphi. Contextual interrelationships of the barriers, which have been derived, are established by mixing the “Decision-making trial and evaluation laboratory method” (DEMATEL) and “Interpretive structural modeling” (ISM) technique. Sensitivity analysis is conducted to verify the model’s robustness. Findings Fear of job losses and absence of an attitude toward change are seen to be the principal obstacles to digitalization in the age of I4.0. Organizational culture, inadequate digital competences and poor financial resources are also seen to be key obstacles that prevent SMEs from harnessing digitalization for sustainable value creation. Moreover, structural obstacles like old technology infrastructure and absence of strategic alignment also hinder the advancement of digitization. Practical implications Insights from this work will help practitioners in strategy formation to identify and pinpoint significant barriers to digitalization. The framework developed offers a systematic approach to prioritizing these barriers based on their interdependence and causal relationships, enabling decision-makers to tackle the most critical issues first. This study provides a different aspect of digitalization for stakeholders to better understand the interrelationship between the barriers to the digitalization of operations for sustainable value creation in the era of I4.0. It offers specific guidance on overcoming resistance to change, upgrading digital skills and enhancing strategic focus within SMEs. Originality/value Originality of this work lies in identification of barriers from Indian perspectives for digitalization of operations in the I4.0 era for long-term sustainability and value creation. This study uniquely integrates ISM and DEMATEL methods to model the intricate relationships among various barriers. It offers a deeper understanding of the causal structures influencing digitalization. Moreover, it bridges a significant gap in the literature by highlighting the operationalization of I4.0 concepts within SMEs and addressing the challenges they face in creating sustainable value through digitalization.