The impact of industry 4.0 on the nexus between supply chain risks and firm performance

Over the past decade, the literature on supply chain risk management and industry 4.0 is growing exponentially. Despite the conceptualized link between these two concepts, yet most of the existing studies discuss them in isolation. Underpinning dynamic capability theory, this study delves into the nexus between the three critical risks, industry 4.0 and the firm’s performance. Structural equation modelling was employed on a sample of 249 useable responses received from the firms operating in the Australian agri-food supply chain. The analysis demonstrates that all the three risks, including financial, transportation and supply-demand mismatch, have a significant negative impact on the firm's performance. However, industry 4.0 as an idiosyncratic trait of the well-designed operations triggers innovative practices and dynamic risk management capabilities, enabling firms in the supply chain to substantially reduce the exposure to these risks. The multi-group analysis uncovers that the magnitude of the risks for the firms that are integrated with industry 4.0 is much less and non-significant than others. Building upon the existing void in the literature and key tenets of dynamic capability theory, this study makes numerous theoretical and practical contributions. Limitations and future avenues of research are also discussed.