This study examines the mediating role of dynamic capabilities the adoption of Industry 4.0 technologies and its impact on manufacturers' operational and innovation performance, adopting the microfoundational theoretical perspective of dynamic capabilities. Using survey data across multiple countries ranked in the top quartile of the Global Manufacturing Risk Index, the proposed model was empirically tested through multivariate analysis methods. The findings reveal that I4.0 adoption leads to enhanced innovation performance for manufacturers in developed countries and improved operational performance for those in developing countries. It is found that dynamic capabilities serve as a key mediator in both cases. However, I4.0 adoption does not significantly impact innovation performance in developing countries or operational performance in developed countries. The study concludes that manufacturers can maximize the benefits of I4.0 investments through a strategic focus on leveraging dynamic capabilities. The outcomes vary by economic context, enabling operational excellence in developing countries and driving innovation leadership in developed countries.

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Dr. Anupama Prashar