CEO Characteristics, Industry 4.0 Capability Disclosure, and Firm Performance

Abstract

Industry 4.0 (I4.0) garnered significant attention from academics and practitioners in the last decade. However, there is a lack of a measure in the extant literature that evaluates I4.0 and digital transformation capability disclosure of companies. The purpose of this study is threefold. First, we conceptualized and developed a novel measure, “Industry 4.0 Capability Disclosure Index (I4.0-CDI)”, using machine learning and text analytics to assess I4.0 and the digital innovation capability disclosure of companies. Second, we investigated the influence of CEO demographics, such as CEO age and gender, on a firm’s I4.0 capability disclosure. We found that CEO age has a negative and statistically significant relationship with I4.0-CDI. Finally, we examined the impact of I4.0 capability disclosure of firms on their financial performance. Our results suggest that I4.0 and the digital capability disclosure of firms have a positive and statistically significant association with their financial performance. This study makes significant contributions to the literature on CEO characteristics, I4.0, and innovation. It is among the first to derive a measure of I4.0 and the digitalization capability disclosure of organizations using machine learning algorithms and text analytics. Our findings provide invaluable insights for academics and practitioners alike.