**2. The Czech Republic in a nutshell**

The Czech Republic displays a moderate level of digital transformation with a high position in the area of ICT start-ups. The Czech Republic's performance is slightly under the average's line of the EU member states in most of the dimensions. The fields of entrepreneurial culture, e-leadership, and supply and demand of digital skills provide scope for improvement. The Czech government launched several programs seeking to support digital transformation further. The measures aim to promote entrepreneurship, support new business ideas, provide assistance in obtaining new technology, and enhance cooperation and knowledge transfer.

The Czech Republic has one of the highest shares of industrial production per GDP among EU countries (approximately 32% GDP) [8]. Furthermore, the country has high industrial ties with Germany, which is its strategic business partner, thus integrating into the German industrial supply chain. The Czech economy duplicates its development in Germany according to its dependence, so it is necessary to respond quickly to the changes. Therefore, the national initiative "*Průmysl 4.0*"—P40—(Industry 4.0) has arisen as a national approach aiming to maintain and enhance the competitiveness of the Czech Republic in the wake of the Fourth Industrial Revolution. The concept was first presented during the 57th *International Engineering Fair in*  *Brno*, September 2015, and approved by the Government of the Czech Republic on 24 August 2016. The *Ministry of Industry and Trade* (MIT) plays a vital role in the implementation process. However, there is a robust interdisciplinary cooperation between the ministries, social and industrial partners, and academia [9].

digitalization drives values for nations and is a crucial driver for GDP growth and also have a positive net impact on job creation. From a government point of view could be found positive effects in increasing productivity in government operations (for example, tax collection and data management), to identify and analyze societal trends with big data tools, and more efficient

A Research Agenda of Industry 4.0 from the Czech Perspective

http://dx.doi.org/10.5772/intechopen.71798

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There are also identified values for companies in areas of access to the more significant market (increasing sales), though digitization of business processes and business models that increase productivity potential and also open access to government data can spur innovation and better access to talents (digital channels). Society, especially citizens, could drive values in increased competition (consumers can find the best products at the lowest price-point), in access to new types of products and services (sharing economy), in better employment possibilities, and in facilitating access through e-government services [8]. Based on these identified values follows the next part of the chapter that defines and identifies the current state of the digital economy

Regarding the current state of the digital economy in the Czech Republic, in *Digital Economy and Society Index* 2016 (DESI), the Czech Republic has an overall score of 0.5 and ranks 17th out of the 28 EU member states (see **Table 1**). An international view of the state of the digital economy in the Czech Republic offers the *Digital Development Index*. The index focuses on the period 2008–2013 and takes into account the four sets of factors: supply, demand, innovation,

The Czech Republic, according to this index, lags behind the average, especially in the area of innovation and quality of institutions; on the contrary, better than the average result is confirmed in the field of digital infrastructure. By individual countries' results, there is a risk of deepening stagnation in the context of international competition, which the Czech Republic is indeed threatening if the digital economy is not further developed and the state administra-

Therefore, the crucial task is, to sum up, the way of government policy direction and the key measures that individual government officials take to prepare for the development of the digital market. Creating approaches in the form of strategic documents could not replace existing and approved conceptual documents, but preferably cover them. In some areas, the

**Rank Score Cluster score EU score**

**3. The state of the digital economy in the Czech Republic**

tion will not receive the appropriate attention on this topic.

DESI 2017 18 0.5 0.54 0.52 DESI 2016 17 0.46 0.51 0.49

*Source*: Europe's Digital Progress Report (EDPR) 2017, Country Profile Czech Republic.

communication with citizens and businesses.

in the Czech Republic.

and institutions [15].

**Table 1.** DESI ranking.

Objectives of the policy are based on the national strategy developing the vision of a fully digital economy toward the real cyber revolution within the Czech Republic. The conceptual proposal is based on data and information collected by the experts and provides recommendations for next steps in several areas. The focus is on building data and communication infrastructure, the adaptation of the education system, introduction of new tools in the labor market, adaptation of the social environment, and financial help for the companies related to the introduction of new technologies and know-hows. There are three primary objectives [9]: first, to enhance the ability of Czech companies to be involved in the global supply chain; second, the implementation of the Industry 4.0 principles will lead to more efficient manufacturing, meaning faster, cheaper, and resource-effective production; third, to enhance the cooperation with R&D and industry association, universities, and Academy of Sciences of the Czech Republic for the development of software solutions, patents, production lines, and export know-hows.

According to *Roland Berger Industry 4.0 Readiness Index* based on industrial excellence (production process sophistication, degree of automation, readiness workforce, and innovation intensity) and value network (focus on high value-add, industry openness, innovation network, and internet sophistication), the Czech Republic is included into "*traditionalists*," that is, countries (for example Slovenia, Slovakia, Lithuania, and Hungary) that benefit from a high-quality industrial base but have not yet introduced initiatives to shift the industry to a new era [10]. Czech businesses benefit from active participation in online trade and belong to the countries with high manufacturing share, but with a low level of readiness to Industry 4.0. Moreover, a significant share of enterprises' total turnover derived from e-commerce contributes to a stable position of the Czech Republic in the area of e-commerce among the EU member states. To sum up, according to Ref. [11], following dimensions show similar tendencies, including digital infrastructure, integration of digital technology, investments, and access to finance and ICT start-ups. On the other hand, Czech Republic faces challenges regarding entrepreneurial culture and the supply and demand of digital skills.

### **2.1. How digitalization drives value**

The paradigm of Industry 4.0 is essentially outlined by three dimensions [12–14]: (1) horizontal integration across the entire value creation network, (2) end-to-end engineering across the entire product life cycle, and (3) vertical integration and networked manufacturing systems. Based on these dimensions, it can be defined that digitalization creates value for individuals, corporations, and society alike. On the corporate side, it can expand reachable markets for companies both domestically and internationally, increasing sales potential. The business also benefits from the productivity increase that comes with the digitalization of corporate processes, for instance, in digitized supply chains, automated production lines, and digitized distribution systems [8]. Digitalization is a challenge for each country, and Alm et al. [8] represents that digitalization drives values for nations and is a crucial driver for GDP growth and also have a positive net impact on job creation. From a government point of view could be found positive effects in increasing productivity in government operations (for example, tax collection and data management), to identify and analyze societal trends with big data tools, and more efficient communication with citizens and businesses.

There are also identified values for companies in areas of access to the more significant market (increasing sales), though digitization of business processes and business models that increase productivity potential and also open access to government data can spur innovation and better access to talents (digital channels). Society, especially citizens, could drive values in increased competition (consumers can find the best products at the lowest price-point), in access to new types of products and services (sharing economy), in better employment possibilities, and in facilitating access through e-government services [8]. Based on these identified values follows the next part of the chapter that defines and identifies the current state of the digital economy in the Czech Republic.
