How the adoption of industry 4.0 technologies is related to participation in global and domestic value chains: Evidence from Russia

Abstract

This study explores the relationships among Industry 4.0 technologies, their application areas, and the involvement of Russian manufacturing firms in global and domestic value chains. We apply logit and multinomial logit regressions using an original survey dataset of approximately 1700 Russian manufacturing firms. We make a novel contribution to the literature by uncovering an asymmetry in adopting Industry 4.0 technologies among Russian industrial firms in domestic value chains (DVCs) and global value chains (GVCs). This asymmetry has the potential to impede GVC localization and DVC internationalization. Based on our results, software automation solutions are the only ones demonstrating statistical significance for firms participating simultaneously in GVCs, DVCs, and both GVCs and DVCs. Companies in DVCs demonstrate a broader utilization of Industry 4.0 technologies across various application areas. We also identify evidence of reshoring in DVCs, indicating that Industry 4.0 adoption encourages firms to establish enduring relationships with domestic suppliers. Highlighting that differences in technology adoption are influenced by external factors, including adherence to international standards and regulatory principles, we propose policy implications for developing countries. Recommendations encompass reducing entry barriers to DVCs, improving procurement transparency, and promoting competition in the digital solutions market to empower firms for seamless GVC integration.