Internet of Things (IoT) Implementation and Operational Efficiency: The Moderating Role of Employee Digital Skills

Abstract

The rapid advancement of the Internet of Things (IoT) has transformed operational processes across industries, offering opportunities for enhanced efficiency, real-time monitoring, and data-driven decision-making. Despite these benefits, the successful realization of IoT-driven operational efficiency often depends on organizational human capital, particularly employee digital skills. This study investigates the impact of IoT implementation on operational efficiency in Pakistani manufacturing and technology SMEs, while examining the moderating role of employee digital skills. A quantitative survey was conducted among 400 senior managers and technical personnel responsible for IoT adoption, and data were analyzed using Partial Least Squares Structural Equation Modeling (PLS-SEM). Results reveal that IoT implementation significantly enhances operational efficiency, and this relationship is strengthened when employees possess higher levels of digital skills. The findings highlight the critical interplay between technological adoption and workforce capabilities, offering practical implications for managers and policymakers seeking to leverage IoT for organizational performance. This study contributes theoretically by integrating the Technology–Organization–Environment (TOE) framework and Resource-Based View (RBV) to explain the contingent effects of human capital in IoT-driven operations.