How Does Awareness Toward the Industry 4.0 Applications Affect Firms' Financial and Innovation Performance?

The main purpose of this study is to reveal the effect of awareness toward the Industry 4.0 applications on both financial and innovation performance in Turkey by using firm-level data provided by the Ministry of Science and Technology administered to 10,063 individual firms in the manufacturing industry in 2016. The study employs various methods, including ordinary least squares (OLS) and probit analysis. Additionally, instrumental variable analyses were conducted to eliminate the potential endogeneity problem among variables in the model. According to our results, the awareness toward the adoption of Industry 4.0 applications positively and significantly affects innovation performance measured as R&D, innovation activities, and patent applications. Thus, the presence of Industry 4.0 applications enables firms to explore new knowledge sources which are necessary for product and process innovations. However, firms awareness of Industry 4.0 applications does not turn into significant improvements in their financial performances and patent grants.