Researching the effects of automation and digitalization on manufacturing companies' productivity in the early stage of industry 4.0

In recent years, great expectations have developed concerning the digitalization of industry and its potential to increase manufacturing performance. The terminology currently used in this context indicates that exponential advances are expected. Concrete case studies, however, suggest that there are in fact many forms of digitalization that need to be considered separately. Moreover, it appears that simply integrating digital technologies into production does not automatically imply increased productivity and rarely occurs as a frictionless process. Finally, anecdotal evidence suggests that digitalization occurs as part of a systemic effort, so that its specific contribution may be overrated. In this paper, we present the findings of our research into the effects of advanced manufacturing technologies (relevant for Industry 4.0) on production performance. Focusing on the early stages of digitalization, when the political term ""Industry 4.0"" became fashionable, we conducted an analysis based on a dataset from the Fraunhofer Institute for Systems and Innovation Research's 2012 German Manufacturing Survey. In addition to confirming the generally positive effects of automation technologies at that time, our results show that, while certain effects are indeed directly attributable to digitalization, these did not emerge without preconditions on their own. Furthermore, the results suggest that the "digitalization" of industry has progressed gradually, in a sequence of steps, as was the pattern for the introduction of all past breakthrough technological innovations into the production system, from the steam engine to electricity. Typically, the invention of breakthrough technologies first spurs the development of other, related technologies before these technologies become prevalent in the production system.