The Role of Dynamic Capabilities and Industry 4.0 in Sustaining ICT Service SMEs in Malaysia: Conceptual Paper

Small and medium-sized enterprises (SMEs) are core to the economic growth of the Malaysian economy, but there is a challenge in maintaining competitiveness in the face of disruptive wave of the Fourth Industrial Revolution (IR4.0). Current studies on IR4.0 adoption have been conducted mostly in the manufacturing industry with little emphasis on the service sector especially information and communication technology (ICT) SMEs. This theoretical paper is based on the dynamic capability theory and suggests a model that places four independent variables (technological capability, innovation culture, organizational readiness, and leadership capability) and organizational sustainability as the independent variable and mediated by IR4.0 adoption. The framework emphasizes the use of digital adoption in converting internal capacity into sustainable performance. The given study is impactful in that it talks about an insufficiently examined context of the service SME, applies dynamic capability theory to IR4.0 adoption research, and provides policy suggestions to enhance SME digital transformation.