How smart is a 'smart factory'?: an organizational view.

This article examines the concept of the "smart factory"—a data-intensive, digitally integrated manufacturing system—from an organizational perspective, using a unique survey of 939 Korean manufacturing plants across eight industries. It defines factory smartness through two key dimensions: system integration (SI), which includes vertical and horizontal network integration, and data sharing and use (DSU), encompassing data-driven decision-making and data sharing practices. The study finds that increased smartization correlates strongly with improved factory performance, particularly higher physical and revenue productivity, reduced defect rates in assembly line processes, and greater product variety in batch processes. Importantly, the research highlights that digital technology adoption alone does not drive smartization or productivity gains; rather, effective smartization depends on complementary factors such as structured worker incentive management and CEO leadership traits, including risk tolerance and interest in innovation. These findings underscore the role of organizational capital in digital transformation and suggest that coordinated policies addressing both technology and management practices are essential for fostering smart factories, especially among small and medium-sized enterprises.