Abstract
In today's rapidly evolving business environment, digitalization has emerged not only as a technological trend but also as a strategic imperative. This paper develops a conceptual framework that examines how Industry 4.0 (I4.0) technologies and tools drive strategic innovation and enable the transformation of business models. Based on a systematic literature review, the framework identifies a set of organizational and contextual preconditions (strategic vision, organizational culture, digital skills, infrastructure, financial resources, and regulatory conditions) that can act as either enablers or barriers to innovation. The analysis reveals that these preconditions give rise to two contrasting innovation cycles: a virtuous cycle, where favourable conditions amplify the adoption of digital technologies and foster business model transformation, and a vicious cycle, where unfavourable conditions reinforce technological inertia and hinder strategic development. By integrating insights from innovation management, digital transformation, and business model theory, the framework offers a nuanced understanding of how technology and strategy intersect and provides actionable guidance for managers seeking to move beyond operational improvements toward reimagining value creation, delivery, and capture in the digital age.