Transformation to INDI 4.0 by Measuring Rewards Effect Through Entrepreneurial Orientation in the Manufacturing Firm

Abstract

This article aspire to review the factors influencing the organizational performance of Indonesian manufacturing firms about their readiness for the transformation into the Industrial Revolution (IR) 4.0 era. The study proposes a framework based on the classic VIE (Valence-Instrumentality-Expectancy) framework, which is also popularly known as the Expectancy Theory to magnify the performance of the firms in term of technology adoption. Previous research indicates that both rewards and entrepreneurial orientation (EO) significantly impact firm performance. However, some studies suggest that in certain condition, not all dimensions in the rewards practice and EO behaved as the significant predictors. From the previous studies investigation, several research gaps regarding field issue, theoretical issue, and model have been recognized. First, Organizations and human resources in Indonesian firms show relatively low readiness to adapt to the Industry 4.0 environs, particularly in the topics of the innovation of new product and the efficiency of production. Second, there’s a lack of thorough exploration of reward systems in both field implementation contexts and academic study. Third, the relationship between rewards and organizational performance, which mediated by EO, deserves more attention. Lastly, the independent components of rewards (financial and non-financial) and their relationship with entrepreneurial orientation as a multidimensional construct, remains unexplored. A quantitative research approach will be employed, utilizing an online questionnaire survey that will be distributed to 300 manufacturing firms in the textiles industry in West Java Province of Indonesia. The data analysis will be done by utilizing Partial Least Squares – Structural Equation Modelling (PLS-SEM).