Industry 4.0: driving factors and impacts on firm's performance: an empirical study on China's manufacturing industry

The Industry 4.0 is important for China to achieve industrial upgrading and promoting the quality of manufacturing development. This paper investigates the driving force of the Industry 4.0 in China's manufacture industry, and evaluates the impact of Industry 4.0 on firm's performance. First, a textual mining is conducted to identify 460 companies that are implementing Industry 4.0 strategy, and then a Probit model is adopted to examine the driving forces of Industry 4.0. Through the propensity scores matching difference-in-difference method, the impacts of Industry 4.0 on firm's performance are evaluated. The results reveal that private and large companies show a higher motivation to promote the Industry 4.0 strategy, and government subsidies have no significant impact on firm's Industry 4.0 decision. The implementation of Industry 4.0 can significant improves firm's financial performance, innovation activities and stock returns, but has no significant impact on supply chain efficiency. In addition, the adoption of Industry 4.0 has positive impact on firm's information transparency grade.