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What is industry 4.0?
Industry 4.0[1] is a term reputedly first used to describe a high-technology strategy proposed by the German government, and is now commonly used to refer to the development of "cyber-physical systems (CPS) and dynamic data processes that use massive amounts of data to drive smart machines" (Sirkin et al. , 2015b). More specifically, Industry 4.0 refers to the emergence and diffusion of a range of new digital industrial technologies (Rü[beta]mann et al. , 2015), notably embedded sensors, so that smart products and devices can communicate and interact with each other (the Internet of things or IoT); the collection and real-time evaluation of data to optimise the costs and quality of production (big data and analytics or BDA); robots with greater autonomy and flexibility; and advanced manufacturing techniques, such as additive manufacturing (3-D printing)[2]. Many of these digital technologies have been available for some time, but recent cost reductions and improvements in reliability mean that their deployment for industrial applications is now more commercially viable (Baum and Wee, 2015), although it is likely that this deployment may well take 15-20 years to be fully realised. Potentially, Industry 4.0 may bring about a change from isolated manufacturing activities to automated, optimised and fully integrated product and data flows within (global) value chains.
The paper proceeds as follows. We first outline the key features of the four new digital technologies and discuss the likely impacts of their deployment on the location and organisation of activities within global value chains (GVCs). We then consider the implications of the technologies for IB theory and, in particular, for the nature of ownership, location and internalisation advantages experienced my multinational enterprises (MNEs). We finish by highlighting various policy issues and putting forward some suggestions for future research.
The new digital technologies and their impacts on the configuration of GVCs
In this section, we briefly outline the essential features of the four digital technologies, and discuss how their (eventual) adoption might disrupt existing configurations of location and control within GVCs.
The Internet of things
An increasing number of physical products are being equipped with sensors that are able to capture and process data, and to then communicate that data to people and other products. Much of the popular attention...