The Evaluation of Technology Startup Role on Indonesian SMEs Industry 4.0 Adoption Using CLD-ABM Integrated Model

Abstract

The role of the Association of Southeast Asia Nations (ASEAN) small and medium enterprises (SMEs) as the regional socioeconomic stabilizer is inseparable from endogenous multisector collaboration. Indonesian SMEs struggled with Industry 4.0 adoption due to the lower digital infrastructure (DI) and digital literacy (DL) index. This study aims to develop a provisional model to explore the role of technology startups (TS) in covering the DI and DL of SMEs. The evaluation was through a simulation model of Indonesian SMEs’ collaboration with the government and TS. The developed model is a concurrent real-time integration of an agent-based model (ABM) with a causal loop diagram (CLD). The simulation results imply that SMEs’ collaboration with TS leads to the early adoption of Industry 4.0 that balances the business competition environment. The model also shows that exponentially rising government aid can help the SMEs into late adoption of Industry 4.0. However, SMEs are still unable to sustain the business competition. Thus, the integrative simulation model is a state-action planning model with each state result bounded to the previous state result. The initial input parameters determine the model behavior. Thus, the model is a good resiliency planner for SMEs’ Industry 4.0 adoption.

Level of Regional Governments' Readiness to Deal with The Fourth Industrial Revolution Challenges: An E-Service Analysis

“…These studies reveal the importance of government political support through providing a policy framework responding to industry 4.0, namely the government's role in making policies and ecosystems that support industry 4.0 (Hoyer et al, 2020); The government responds to industry 4.0 through education policies that encourage innovation (Pabbajah et al, 2020); The role of the Government and start-up company culture are the main factors in the transformation of industry 4.0 readiness in India (Tripathi and Gupta, 2021); The Kazakh government responded to industry 4.0 through macro policy schemes for industrial development and industrial digitalization (Dikhanbayeva et al, 2021); Government policy responses to encourage the use of technology 4.0 through regulations that force the use of more sustainable and mature technologies and encourage initiatives towards the adoption and advancement of less mature technologies (Mabkhot et al, 2021); The Chinese government established the "Made in China 2025" plan to implement several policies to exploit the potential of high-tech manufacturing capacity in Industry 4.0. (Li et al, 2021); The government provides a policy framework that supports technology transfer (Alkhazaleh et al, 2022); Exponentially increasing government assistance can help Industry 4.0 SMEs in collaboration schemes with technology startups (Tama et al, 2022); The government's response through providing subsidies to encourage technological innovation of Chinese energy companies (Li, et al, 2023); The government plays a major role in developing and determining a triple helix collaboration framework between industry, government, and universities to face industry 4.0 (Kiss et al, 2023).…”