How Industry 4.0 and Knowledge Management Shape Sustainable Performance Unequally?

Abstract

Background: Pharmaceutical manufacturers face growing pressure to achieve sustainable performance while meeting strict regulations and adapting to digital transformation. However, the impact of Industry 4.0 technologies and knowledge management on sustainable performance remains inconsistent, especially in highly regulated environments.

Objective: This study investigates the differing effects of Industry 4.0 and knowledge management on sustainable performance and explores the moderating role of transformational leadership in pharmaceutical manufacturing.

Methods: Survey data were collected from 425 managers working at Good Manufacturing Practice (GMP)-certified pharmaceutical firms in the Jabodetabek region of Indonesia and analyzed using partial least squares structural equation modeling (PLS-SEM).

Results: The results demonstrate that Industry 4.0 has a positive and significant direct effect on sustainable performance, confirming its role as an operational enabler in regulated environments. In contrast, knowledge management has no significant direct effect on sustainable performance, indicating that its contribution remains limited when it is primarily associated with compliance and documentation practices. Transformational leadership negatively moderates the relationship between Industry 4.0 and sustainable performance, suggesting a misalignment between this leadership style and the need for process stability during the early stages of digital implementation. Conversely, transformational leadership positively moderates the relationship between knowledge management and sustainable performance, indicating that leadership conditions influence the extent to which knowledge management contributes to performance outcomes.

Conclusion: These findings suggest that organizational capability effectiveness depends on alignment with leadership style. Managers should stabilize digital processes and promote knowledge management through learning-oriented leadership to improve sustainable performance.