INDUSTRY 4.0 IMPLEMENTATION FACTORS FOR AGRI-FOOD AND MANUFACTURING SMEs IN CENTRAL AND EASTERN EUROPE

In partnership with the project “Possibilities and barriers for Industry 4.0 implementation in SMEs in V4 countries and Serbia” - funded by the Visegrad Fund, the authors conducted a survey with 124 small and medium enterprises (SMEs) in Central and Eastern Europe. Respondents (middle and top managers) from Bulgaria, Serbia, Hungary, Poland, Slovakia, and the Czech Republic were questioned about strategic factors affecting digitalization. We analyze theoretical factors based on literature review and if they are valid in the managerial context, not only for manufacturing, but also for the agri-food sector, where digital transformation (Agriculture 4.0) is considered to be in its infancy. Results indicate 21 variables that were aggregated to form five (5) strategic factors (Leadership, Management Strategy, Organizational culture, Business environment and Circular economy) with key importance for Industry 4.0 implementation in the organizations. The comparison based on Exploratory Factor Analysis between the manufacturing and agri-food sector results in statistical differences for all five factors. This study contributes to the management literature, and the identified factors can guide companies to develop a business model to be implemented in SMEs companies in their digital transition.


INTRODUCTION
In 2011, Europe joined the so-called Fourth Industrial Revolution as part of an institutional EU strategy to promote the digitalization of manufacturing -Industry 4.0 (Santos et al., 2017). Massive application of sensors, wireless communication and networks, more intelligent robots and machines and "big data" analyticstransform the manufacturing process in Europe (Brodeur et al., 2022).
In fact, "Industry 4.0" is a very broad term comprising: product development, production processes, efficiency and strategy, data management, relationship with consumers, and competitiveness, amongst others. While most academic works study specific technologies implementation, sector, or process digitalization, only a few authors focus on the management perspective in the enterprise. Strange and Zucchella (2017) and Piccarozzi et al. (2018) offer review of the principal organizational issues. However, the management literature still needs welldefined strategy based on the critical factors for the efficient digital transformation of the industrial companies.
Also, advanced, digital manufacturing technologies can unlock the circularity of resources with supply chains, even though the connection between circular economy and Industry 4.0 has not been well explored so far (Lopes de Sousa Jabbour et al., 2019).
This article takes a new approach to systematizing the implications of Industry 4.0 adoption with the goal to explore its relations with the circular economy performance of companies. The objective is contribute to the academic research, but also to help SMEs in the process of their digital transition.
To achieve it, first, we aim to assess whether the critical success factors, as previously defined in academic literature for Industry 4.0 implementation (Varbanova et al., 2022) correspond to the industrial manufacturing and agri-food context of SMEs in Central and Eastern Europe. Secondly, we explore the key strategic factors for both manufacturing and the agrifood sectors, taking into account Agriculture 4.0 infancy and the lack of studies addressing this issue. Besides, smart farming technologies have a strong potential to improve the economic performance of the sector, contributing to more sustainable agriculture (Knierim et al., 2019).
In agreement with the study by Varbanova et al. (2022), digital transition and circular economy are reviewed in detail, considering the data collected in SMEs from the countries of the Visegrad Group (namely Czechia, Hungary, Poland and Slovakia), Serbia and Bulgaria. The empirical research focuses on SMEs managers' and owners' perceptions of the impact of digitalization adoption on circularity in the companies surveyed, with the aim of understanding their attitudes towards these two key trends. Moreover, this study identifies ways SMEs can progress and develop based on appropriate digitalization and sustainability strategies (Gupta & Vegelin, 2016), contributing to a recent conceptual framework (Tick et al., 2022) for the integration of these two trends in the practice of SMEs. Therefore, our main research questions are: RQ1. Which critical success factors for implementing Industry 4.0. in organizations are valid in practice for SMEs in Central and Eastern Europe?
RQ2. Do all the studied factors apply to the digital transition of SMEs companies in Central and Eastern Europe in manufacturing, but also in the agri-food sector?
To achieve the objectives, a quantitative research method was used and the Exploratory Factor Analysis technique (particularly suitable to extract a few factors from many related variables to a more manageable number), followed by the Analysis of Variance (Independent Sample T-test -to check the mean-variance across two groups) were applied. The authors are aiming to contribute to filling the gaps in the management literature and to confirm the empirical significance of the critical success factors to be endorsed by management teams to quickly adapt and increase circular economy performance and competitiveness in Industry 4.0 business environment. This paper is organized as follows: section 2 presents the literature review, which discusses the main concepts of Industry 4.0, critical factors for adoption and transition of the manufacturing and agri-food sectors towards circular economy. Section 3 describes the research methodology used in this study, then section 4 presents the results and discussions from these analyses. Finally, section 5 presents the conclusions.

LITERATURE REVIEW
Industry 4.0 is characterized by the horizontal and vertical integration of production systems driven by real-time data interchange; but also flexible manufacturing to achieve customized production. The components of Industry 4.0 include, but are not limited to cyber-physical systems, the internet of things, cloud manufacturing, and additive manufacturing (Varbanova et al., 2022).
As previously mentioned, academic literature is short of a theoretical comparison between traditional and digital management in SMEs (Johansson et al., 2017;Strange & Zucchella, 2017). Most authors study some management aspects related to technological advancements in the Industry 4.0 era. For instance, Almada-Lobo (2015) focuses on decentralization and control techniques; Prause and Atari (2017), and Barsegyan and Shinkevich (2020) suggest new business models for the manufacturing. Finally, Prause (2015), and Antonova and Stoycheva (2018) add open innovation or lean tools (Simeonova, & Nedyalkov, 2020).
Few studies try to integrate the three (3) sustainability aspects: social, economic, and environmental (or the triple bottom line (TBL) assessment criteria, introduced by Elkington in the mid-1900s) in their evaluation of smart manufacturing (Lopes, 2022).
Indeed, today the manufacturing industry is transforming from a linear to a circular economy. Practices of circular economy (CE) will result in retrofitting industries, thereby enabling them to be more efficient in reusing, remanufacturing, and reducing the waste of resources. The circular economy is based on three fundamental principles, namely "preserve and enhance natural capital," "optimize resource yields" and "foster systems effectiveness'' (Sariatli, 2017). The importance of integrating CE practices and digital technologies has been recognized by the academic community (Govindan & Hasanagic, 2018;Dantas et al., 2021). For example, a study by de Sousa Jabbour et al. (2018 integrated Industry 4.0 and CE principles suggesting six action areas that enable organizations to move towards the, namely reclaiming, retaining, and restoring the health of ecosystems; extend the life-cycle of the products; removal of waste in the production and supply chain processes; extract biochemicals from organic waste; dematerialize and implement I-4.0 technologies.
The interconnection between the TBL sustainability goals and Industry 4.0 is presented in Figure 1.
The digital transition, however, has its specificities in various economic sectors. In agriculture, the term "Agri-Food 4.0" is an analogy to "Industry 4.0", coming from the concept of "Agriculture 4.0". The agri-food industry has been evolving progressively according to the technological development in the manufacturing sector characterizing Industry 4.0 (Medina & Miranda, 2019).
Smart farm activities are connected to the cloud, which contributes to better management performances and higher results in the industrial enterprise (Sommer, 2015;Wang et al., 2016), while realizing sustainable industrial value creation on all three sustainability dimensions-economic, environmental, and social. Sustainability in digitalized agri-food organizations, as described by Albiero et al., (2020) and Moldavska et al., (2017), could be related to energy and resource efficiency, increased productivity, and shortening of innovation, amongst others. Žemaitis (2014), suggest product traceability and transparency during the entire life-cycle of the product, and operational strategies (Gunasekaran et al., 2013) to achieve sustainable targets. The popular CE-based approaches for resolving the issues faced by the food sector consist of technology-based solutions, social and behavioral changes, and policy recommendations.
However, the extant scientific literature on Agri-food 4.0 lacks consistent focus on the CE concept. Industry 4.0 is strongly cited from 2014, while Agriculture 4.0 is only recently quoted. Maffezzoli et al. (2022) highlight that the implementation of digital Figure 1. The interconnection between the TBL sustainability goals and Industry 4.0 solutions in the primary sector is not a trend, but aims to address current and future challenges, such as the need to make crops more efficient and effective and to evolve in an environmentally sustainable way. For example, a recent qualitative study exploring the factors intertwined in the adoption of Agriculture 4.0 suggested that regulatory pressure, cost optimization, increasing customers' concerns about health hazards, and intent to align supply and demand are key drivers.
In the Systematic Literature Review (SLR) conducted by Varbanova et al. (2022), following the PRISMA protocol, the critical success factors for Industry 4.0 included: (1) strong leadership; (2) well-defined management strategy; (3) adaptive organizational culture; (4) establishment of management information systems; (5) agile project management; (6) elevated level of cyber security; (7) cross-lined product life cycle and focus on consumer relations and finally, (8) respect of sustainability (in the form of circular economy) and regional specifics. Those were ultimately used as the reference factors explored in the present study. The next section will explain the methodological procedures.

Sample and data
The research was conducted under the project "Possibilities and barriers for Industry 4.0 implementation in SMEs in V4 countries and Serbia". Research teams from the participating universities developed a self-administered questionnaire to collect data from SMEs in Hungary, Slovakia, the Czech Republic, Poland, Serbia, and Bulgaria. For the current analysis, the authors used the data collected between June and August 2021 in the six aforementioned countries, targeting specifically middle and top management executives in SMEs in Central and Eastern Europe. From the 635 valid respondents, 124 cases were selected (corresponding to small and medium-sized companies). From these, 34 cases were classified as SMEs from the agri-food sector, and the remaining 90 cases were assigned to other SMEs manufacturing sectors. Anonymity was ensured, and no personal information was required.

Questionnaire
The questionnaire was divided into different sections: information about the respondent and the company, level of technological implementation, knowledge, acceptance, and benefits from Industry 4.0 and sustainability.
For the current study, the choice of variables was based on the SLR study of Varbanova et al. (2022), which identified 8 critical success factors to serve as a base for implementing Industry 4.0 in a manufacturing organization. The questions on management strategy, leadership, organizational culture, resources (MIS; agile project management and cybersecurity systems are combined here), cross-lined product life cycle and focus on the consumer, business relations, and most importantly on circular economy, composed 21 variables (see full variable names in Table 1) presented in six groups (after combining them).
The researchers aimed to investigate the relationships between the 21 variables that focus on short-term plans for company digitalization, knowledge and resources, perceived benefits from Industry 4.0 technologies, processes, and methods, the Industry 4.0 challenges and perceived benefits for the businesses.

Research hypotheses
The theoretical review and the questionnaire provided input to assess the relevance of the suggested variables in the academic literature concerning digitalization. Consequently, the authors formulated 2 central hypotheses on Industry 4.0 critical success factors among SMEs in general in the Central Eastern European region. H2. The pre-defined factors have the same positive impact on SMEs from the agrifood sector vis-à-vis other manufacturing industries in Central and Eastern Europe.

Data Analysis methods
The quantitative analysis was conducted using SPSS version 27. After some introductory descriptive analysis on the SME demographic profile, Exploratory Factor Analysis was carried out to find out the critical success factors of SMEs' digitalization. This type of analysis is based on correlations between variables and was used in other academic studies related to Industry 4.0 to define critical success factors for implementation in enterprises (Wahl, 2015, Castelo-Branco et al., 2019. Analysis of Variance (Independent Samples t-test) was carried out to test any significant differences between the manufacturing and agri-food sectors in relation to these implementation factors.

Demographic profile of the SMEs
From the 635 valid responses gathered, we have selected only cases from SMEs in the manufacturing and the agri-food sectors, which represented 124 valid responses. Of these, 26.6% were micro companies, 27.4 % were small companies and 46% were medium-sized companies. Most of the companies have annual revenues below 2 million euros (41.9%). Most of the enterprises (21.6%) are based in the Czech Republic; 20.2% in Poland and the same (20.2%) in Bulgaria; 14.5% are in Serbia; 12.2% in Slovakia, and 11.3% in Hungary. Furthermore, 19.3% (24 companies) are classified in the agri-food sector and the remaining 100 companies (80.7%) are in manufacturing. From the studied cases, 54.8% (68 companies) operate for more than 20 years in the sector (mature businesses) , and the other 55.2% (56 companies) operated for less than 20 years (including start-ups, youth growth, mature growth businesses).

Factor Analysis and Independent Samples t-test
We used three criteria to test whether Factor Analysis could be applied to our data: first, Bartlett's test of sphericity (significant p-value of <0.001 implies the rejection of the H 0 hypothesis of uncorrelated variables), meaning that the model fits the observed data. The second criterion was the acceptable measure of sampling adequacy (Kaiser-Meyer-Olklin (KMO) = 0.876) and the third criterion was the correlation matrix, which further confirmed the validity and high correlation between the variables. Communality (amount of variance explained by the factor solution) was higher than 30% for all the variables (Table 2) and the highest was for the short-term plans for Industry 4.0 implementation, whilst the lowest was for the inclusion of SDGs in the long-term strategy. Based on the factor loadings after rotation, five (5) factors were retained (Table  2).
Next, significant mean differences between the sectors agri-food and manufacturing were analyzed through Independent Samples t-test. Table 3 presents the results from the Levine's test and shows that equal variances are assumed.
Then, the analysis further confirms significant difference in mean for all the five  Table 3. Independent Sample's t-test analysis factors P-Value < 0.05 (Table 3). The Confidence Intervals of the Difference present negative values for the factors and exclude 0, so we reject H 0 of equal means and we assume that means of agriculture for (1) Management strategy, (2) Leadership and organizational culture, (3) Organizational culture (including implementation of MIS systems, cybersecurity etc.), (4) Business environment (including consumer relations) and (5) Circular economy are significantly higher than for manufacturing.

DISCUSSION
H1. Pre-defined factors in the literature review have a significant positive impact for Industry 4.0 implementation for SMEs in Central and Eastern Europe.
The factor analysis with 21 variables revealed five (5) strategic factors with key importance for Industry 4.0 implementation in SME companies in Central and Eastern Europe. To answer the first research question: the factors that impact SMEs in Central and Eastern in their digital transition are: (1) "Management strategy", (2)"Leadership", (3) "Organizational culture" (including implementation of MIS systems, agile project management; cybersecurity etc.), (4) "Circular economy" and (5) "Business environment". They correspond to the pre-defined factors in the literature review by Varbanova et al. (2022), but also in number of other academic works (Bhatia & Kumar, 2022;Moeuf et al, 2020;Lopes de Sousa Jabbour et al., 2018;Dias et al, 2022). Then we fail to reject H1, confirming our hypothesis. H2. The pre-defined factors have the same positive impact on SMEs from the agrifood sector and from other manufacturing industries in Central and Eastern Europe.
The main contribution of our study is the comparison of critical success factors for digital manufacturing to a specific industry sector-agri-food. To answer the second research question, the Independent Samples t-test test proved all of the five factors for Industry 4.0 implementations are also valid for the agri-food sector. Moreover, we observe significant differences in means for the latter. This means what the factors apply with higher strength for the agri-food sector. Therefore, we fail to reject H2.

CONCLUSION
This article contributes to the literature by empirically identifying critical success factors that are valid for the digital transition of SMEs in Central and Eastern Europe. The work is unique, as it addresses a significant gap in the knowledge of two comparatively recent concepts in academic literature -Industry 4.0 and Agri-food 4.0 and proves that the studied factors for the digital implementation in the manufacturing sector apply for the agri-food industry, but some of them with less extent.
The results from our study are promising and show that there are important steps to be considered by the management teams in an organization for Industry 4.0 (Agri-food 4.0) transition. They include a well-defined management strategy, strong leadership, organizational culture ready for change (also including the initial level of digitalization and human capital), the business environment (including not only business regulations, relations of the companies with partner organizations and subcontractors, but also the efforts towards the life-cycle development of the production to be centered on consumers expectations). Finally, among the drivers for the digital transition, circular economy of production in the manufacturing industries must be included in the organizational plans and aspirations.
Moreover, future studies could compare the preparedness for Industry 4.0 between Central and Eastern European companies and the more developed Western ones in the EU or to study additional factors with higher importance for the Agri-food 4.0 considering the sector's specifics.