**6. National knowledge management**

Innovative culture is a tolerance of ambiguities, failures, divergent views and people are praised for trying out something new irrespective of the outcomes of such experiments. Much creativity has been killed due to the culture of intolerance to failures, as people are laughed at whenever they failed to achieve something they are experimenting with. Organisations as well as nations that want to be competitive in Smart Manufacturing and Industry 4.0 revolu-

The role of government in innovation pervades all the sectors of the economy. As the sole regulator of the economy, government can either promote or hinder innovation. Government promotes innovation through the formulation of user-friendly legislation and policies that are supportive to both creative and innovative endeavours in the economy. At the national level, government is responsible for pulling all the sectors of the economy towards a common purpose to achieve economic development. But how does a government achieve this in the first place?

In other countries, Malaysia for example, the government is committed to a lower carbon footprint and reduction of air pollution in order to improve the health of its citizens and create a better environment [17]. To achieve this, the Malaysian government has established the Malaysia Green Technology Corporation (MGTC) to promote green technology under a national green technology policy [17]. This policy has encouraged Malaysian industries in the economy to explore innovative ways to improve development of new products, production processes, firm productivity and ecological improvements. This is a typical government promoting innovation through policy creation and implementation at a national level, which

Innovation at a national level requires efforts from all the sectors of the economy to be spearheaded by a committed government and political will. Countries that have experienced rapid innovation have succeeded doing so because of the government taking the front lead in areas such as policy formulation, funding, openness to external ideas (open innovation) and jointventures in large undertakings of projects. For example, the Chinese government encourages firms to source external knowledge by acquiring foreign technology through the enactment of various legislations, policies and reforms [19]. Innovation policy at a national level that covers a broad spectrum of industrialisation and development needs of a country through financial, tax, industry, trade and Science and Technology (S&T) should serve as a link that connects all

The policy imperatives should define specific types of innovation at NIS such as inbound Open Innovation (OI), Outbound Open Innovation (OOI) and Closed Innovation (CI). This guides players/actors at different levels of the NIS as they engage in innovation endeavours at a national level. The innovation policy should also cater for how the resources of the NIS are shared among the actors, given that some innovation ventures require substantial resources that may not be within individual or organisational reach. Collaboration and engagement of

government and citizens in NIS is paramount for an innovative nation [20].

tion must be at the forefront to encourage diverse ideas as a way to foster creativity.

**5. Government**

50 Digital Transformation in Smart Manufacturing

results in new start-ups/industries [18].

relevant players/actors at various levels of NIS [19].

Since the beginning of Adam and Eve, knowledge has always existed and the co-existence of knowledge and humanity is shown in different human-made exploits [22]. Such exploits can be seen from Pyramids of Egypt, Taj Mahal in India and many others. Just like an organisation, a country's capability to innovate hangs on its domestic (within the boarder) competencies such as its own knowledge, organisational and technological base as well as its skills in discovery, embracing, developing and expanding knowledge generated within its boarders and collaborations with its proximate environment [23]. Knowledge-grounded development in today's global economy has become an arsenal and the ability of nations to generate, transfer and apply knowledge, but also to "tap external knowledge as well as adapt such knowledge for specific needs" locally [24]. For sustained (knowledge) development to take place, countries need to establish mechanisms that facilitate the circulation of data, information and knowledge across developing and developed nations [25].

In the twenty-first century, new organisations are emerging where knowledge is the primary production resource as opposed to capital and labour [26]. It is now believed that efficient utilisation of existing knowledge could create wealth for organisations. Knowledge management (KM) refers to the process of enhancing organisation performance by designing and implementing tools, processes, systems, structures and culture to improve the creation, sharing and the use of knowledge [27, 28]. Knowledge is increasingly becoming more valuable because management is taking into account the value of creativity, which allows for the transformation of one form of knowledge to the next. The perception of the existing relations among numerous systems elements leads to new interpretations and this means another knowledge level where a new perceived value is generated [29]. This relationship denotes that innovation highway hangs on the knowledge development [29, 30]. This relationship has well been captured in the proposed conceptual framework (**Figure 1**).

Previous studies [24] have shown that knowledge generation or acquisition, knowledge sharing and knowledge leverage or utilisation build employees' skills are relevant to the process of innovation. Knowledge management that facilitates collaboration between employees and sectors enhances the knowledge sharing and utilisation, which in turn increase innovation (see **Figure 1**). Therefore, knowledge sharing plays an important role in innovation imperatives. Encouraging knowledge sharing between employees and incorporating KM into strategies lead to gain competitive advantage, customer focus and innovation [24, 31]. Organisations also could trigger off the sharing, application and the deployment of knowledge to facilitate innovation, because KM has a positive effect and contribution to transform tacit knowledge into innovative products, services and processes, which improve innovative performance as shown in **Figure 1**. Some studies showed that there is a relationship between organisational innovation and knowledge transfer as well as reverse knowledge transfer, but its effect depends heavily on learning orientations [24]. In gist, two key elements are important in the definition. From the review of the literature, there is evidence that knowledge is the core component of innovation – not technology or finances.

asset in Smart Manufacturing and Industry 4.0 revolution and managing it is the greatest challenge facing modern managers and organisations [32]. For Smart Manufacturing and Industry 4.0 revolution to succeed, it is critical to map the workers centric approaches with that of Smart

Human Capital in the Smart Manufacturing and Industry 4.0 Revolution

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In Smart Manufacturing and Industry 4.0 revolution, it is not possible to just get rid of them (employees). In fact, unless organisations learn to get the best out of their creative employees, they will sooner or later end up filing for bankruptcy. Similarly, if organisations just hire and elevate workers who are friendly and easy to manage, such organisations will be mediocre at best. This is because suppressed or stifled creativity is harmful organisational growth. While every organisation claims to care about innovation, very few are ready to do what it takes to keep their creative people happy or at least, productive. So what are the keys to engage and retain creative employees? In whatever form or structure, rewards must be seen to motivate and retain the creative human capital for the Smart Manufacturing and Industry 4.0 revolution.

Like parents who rejoice their children's chaos: show your creative absolute encouragement and inspire them to do the illogical and flop. Innovation can originate from uncertainty, risk and experimentation if you know it will work, it is not creative. Creative people are the natural experimenters, so let them try and test and play. This is because there are costs associated

Managers must not find themselves doing the worst by forcing a creative employee to work with someone like them. Such action is likely to flop because employees will compete for ideas, brainstorm eternally or simply ignore one another at the end. That being said, managers should not surround creative worker with colleagues who are really boring or conventional, they would not understand them and fall out. In line with this, recent research suggests that teams consist of diverse members who are open to take each other's viewpoint and perform

The response, then, is to support creative workers with their colleagues who are too conventional to challenge their ideas, but unconventional enough to collaborate with them. These colleagues will need to pay attention to details, mundane executional processes and do the dirty work.

Innovators naturally tend to have more vision. They see the bigger picture and able to comprehend why things matter (even if they cannot explain it). The downside to this is that they simply will not involve in worthless work. This all or nothing approach to work reflects the bipolar character of creative artists, who perform well only when is fuelled by value. This approach can also apply to other employees because everyone is more creative when driven

with experimentation but these are lower than the cost of not innovating [32].

Manufacturing and Industry 4.0 revolution strategies.

**7.1. Spoil them and let them fail**

most creatively [32].

**7.2. Surround them by semi-boring people**

**7.3. Involve them in meaningful work**

by their honest interests and a hungry mind.

In a nutshell, strategic human capital practices are deployed in Smart Manufacturing and Industrial 4.0 revolution to ensure a competitive advantage by focusing extensively towards the human capital and build the knowledge base for a sustained growth. From the strategic human capital management perspective, a set of integrative human capital practices that support organisation's strategy produces a sustainable competitive advantage (**Figure 1**).
