The Dissemination of Industry 4.0 Across Global Value Chains: An International Business Perspective

Introduction

In the world today, digital disruption has become the norm. The proliferation of information systems has permeated every aspect of human endeavour, including the manufacturing sector. The term “Industry 4.0” refers to cyber-physical systems (CPS) and complex data processes that use large amounts of data to control smart machines (Zhong et al., 2017; Vaidya et al., 2018; Villalba-Diez et al., 2019). As can be seen from Figure 1, after mechanisation (the first revolution), widespread use of electrical energy for mass production (the second revolution), and widespread digitalisation (the third revolution), Industry 4.0 is regarded as the fourth industrial revolution (Lasi et al., 2014).

Figure 1.

Industry 4.0 evolution

Industry 4.0 is a combination of emerging digital industrial technologies as well as the proliferation of the Internet of Things (IoT), intelligent products and devices (Ivanov et al., 2020; Matt et al., 2020; Olsen & Tomlin, 2020). Data collection and real-time evaluation help to reduce costs and improve quality because data collection and real-time evaluation help to reduce costs and improve quality (big data and analytics). The literature identifies nine foundational technologies that are referred to as “building blocks of Industry 4.0”. These are: big data and analytics, autonomous robots, simulation, horizontal and vertical system integration, IoT, cybersecurity, the cloud, and augmented reality (Ali et al., 2017; Ali, 2018; Ali M et al., 2018; Ali, 2019a; Ali, 2019b, 2019c; Ali, 2020; Ali et al., 2020; Ali & Abdel-Haq, 2021) (Vaidya et al., 2018).

Since cost and reliability improvements have made digital technologies more viable for industrial applications, it is likely that the deployment of such technologies will not be realised until 2025 or later than 2030 (Vogels et al., 2020). Industry 4.0 has the potential to catalyse a global shift away from isolated production operations and toward integrated, automated, and optimised production and data flows on the supply chains of companies worldwide (Agrawal et al., 2020). First, the chapter provides a general overview of the key digital technologies that are currently transforming the global marketplace and analyses the potential effects of their implementation. After discussing the advantages of ownership, location, and internalisation for multinational corporations (MNCs), the effects of international business (IB) theory innovations, specifically the concept of ownership, location, and internalisation advantages are examined in the context of remote work and sustainability. The chapter concludes with a discussion of a few policy issues and suggestions for future research. The ultimate goal of this chapter is to discover and describe the most recent and advanced emerging technologies, as well as their impact on global value chain (GVC) design and international business and remote work practises.

Rise Of The Internet Of Things

Sensor-enabled products can now process and communicate data for physical products as well as communicate with people and other products (Tawalbeh et al., 2020). Many consumer applications, such as connected household appliances, have recently garnered significant attention. This could lead to far-reaching business-to-business (B2B) applications, such as sensors that provide real-time data, which are capable of detecting equipment wear and tear and allowing preventive maintenance, allowing for better inventory management and determining how products are used and if they are working properly (Bughin et al., 2015). Less reliance on middlemen will result from more integrated data between businesses, suppliers, and customers (Porter & Heppelmann, 2014).