From Tradition to Innovation: How Industrial Revolution 5.0 Gives an Impact on Financial Success in South Asia?

Abstract

The occurrence of IR 5.0 is when human-centered innovations complement the enhancement of smart technologies as the new model that helps emerging economy businesses achieve economic success. This study explores the influence of IR 5.0 on the financial performance of firms in Pakistan, India, and Bangladesh, focusing on two core metrics: Return on Assets (ROA) and Tobin’s Q To control for other firm effects, using the  Generalized Method of Moments (GMM) model with firm-level variables including age, size (assets), Leverage (LEV) and Sales Growth (SG) we analyse the differential effect of IR 5.0 improvements. Findings corroborate a strong positive relationship between the adoption of IR 5.0 technologies and Financial Performance (PF) in the selected countries, suggesting how these technologies can catalyse productivity and enhance value. Comparison with the previous works on IR 4.0 also proves the advantage of IR 5.0 in terms of managing firm capacity and readiness for change. Our study offers important information for policymakers and business executives planning to utilize IR 5.0 technologies to enhance the financial development of nations despite some issues relating to the availability and nature of the data. This paper opens the door to the next research on sector-wise implementation and biennial consequences; however, this study contributes to the development of a fundamental knowledge of how IR 5.0 stimulates financial development in South Asia’s emerging markets.