The impact of IoT on business model innovation: A qualitative study of industry 4.0

Abstract

This study investigates the impact of the Internet of Things on business model innovation with specific regard to the advent of the fourth industrial revolution (4.0). Drawing on the distinctive features of firms that leverage IoT data to transform their traditional business models, such as our focus on software and automobile manufacturing value proposition, cost structure, flexible models, and value capture mechanisms, the study highlights that the integration of IoT in combination with other technologies can positively impact the development of IoT-enabled business model innovations and thus transform the company's traditional business models. Further, the study suggests that businesses' degree of technological diversification and maturity, particularly in complementary or interoperable forms, helps improve this possibility. The thematic analysis between 2019 to 2024 on how Tesla, AWS and Microsoft were adopted to identify patterns and themes in the data, focusing on how IoT is being used to enhance customer experience by leveraging real-time data, enhancing operational performance and efficiency, and creating new revenue streams through innovative services. Our findings indicate that due to the characteristics of IoT, software and automobile firms welcome risks relating to exploring IoT-enabled business model innovations, hence, play a significant role in business innovation, enabling firms to generate new sources of revenue, enhance customer experience, and optimize operations. As our findings imply that by leveraging IoT and addressing the challenges associated with its adoption, businesses can thrive in the digital economy and achieve long-term success.