Who Profits from Industry 4.0? Theory and Evidence from the Automotive Industry
54 Pages Posted: 15 May 2019 Last revised: 31 Mar 2020
Date Written: January 31, 2019
We develop a framework linking organizational and industry architectures to value creation and value capture, and apply it to the case of Industry 4.0 (the coordinated use of digitally-enabled technologies like robots, sensors, and artificial intelligence) in the automotive industry. We argue that if factory owners develop automation methods that capitalize on their greater access to the context in which production data is generated, they will be better able to prevent value from migrating to “digital entrants” that offer automation consulting and data analytics. Manufacturers can do this by adopting an organizational architecture that empowers shop-floor workers to combine their local knowledge with digital tools. Conversely, to the extent that digital entrants develop a more abstract version of these tools that they spread across industries, they will capture more value.
Keywords: automation, industry architecture, industry 4.0, value capture, value creation, value migration
JEL Classification: L21, L23, L62, O31, O33
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