A comparative study of the impact of LSSI4.0 implementation on the financial performance of Chinese manufacturing firms: an empirical analysis

Abstract

Purpose

This paper aims to investigate how implementing lean six sigma and Industry 4.0 (LSSI4.0) can influence a company’s financial performance and discusses the current trend involving LSSI4.0 in China.

Design/methodology/approach

For statistical analysis, financial data was sourced from the China Stock Market and Accounting Research database. Keywords used to assess the implementation status of LSSI4.0 were extracted from the 2007 to 2020 annual reports of A-share manufacturing companies. Regression analysis was applied to the quantitative analyses of 5,041 observational data points from 945A-share manufacturing companies in China.

Findings

LSSI4.0 implementation in the manufacturing industry boosts the firms’ financial performance. However, the former outperforms the latter in terms of long-term advantages. Meanwhile, incorporating lean six sigma (LSS) into Industry 4.0 (I4.0) can lead to long-term improved financial performance compared to solely implementing the I4.0.

Research limitations/implications

The findings possess limited international representativeness because all empirical data were derived from Chinese large manufacturing companies. In addition to return on assets and return on equity, financial performance can also be measured using other financial metrics, such as return on investment. In this study, only listed manufacturing companies were considered as research samples.

Practical implications

Top management must acknowledge the positive impact of LSSI4.0 on financial performance and prioritize implementing I4.0 based on LSS implementation.

Originality/value

Empirical results concerning the effectiveness of LSS implementation in enhancing financial performance are inconclusive, particularly in China. In addition, most studies collected data through surveys and interviews, so the representativeness of their outcomes is limited. Overall, this study evaluated the impact of LSSI4.0 implementation with large sample size.

Citation

Li, N., Hines, P. and Xin, C. (2024), "A comparative study of the impact of LSSI4.0 implementation on the financial performance of Chinese manufacturing firms: an empirical analysis", International Journal of Lean Six Sigma, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/IJLSS-02-2024-0033