In the field of Industry 4.0, various studies considered the engineering industries, however, the limitations of Internet of things (IoT) implementation is not discussed by these studies and literature missed the crucial challenges of IoT implementation, particularly in the Indonesian engineering companies. Therefore, the objective of the current study is to investigate the factors which limits the implementation of IoT. Additionally, the moderating role of employee innovative capabilities is also considered. A survey was carried out in the Indonesian engineering companies for data collection. Data collection was carried out form the employees of these companies. After data collection, structural equation modeling (SEM) was used to analyse the data with the help of Partial Least Square (PLS). Findings of the study demonstrated that there are five key factors which effect the IoT implementation. These factors include; willingness to use, hardware characteristics, replacement of existing technology, failure threat and implementation cost. All these factors have the ability to influence IoT implementation. Additionally, employee innovative capability also has the ability to encourage or discourage the IoT implementation. Therefore, this study is most significant for the engineering industry of Indonesia as it provides the influencing factors towards IoT implementation.
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