The COVID-19 pandemic accelerated the need for technological adoption across industries, yet several firms struggled due to insufficient digital readiness. This study explores the adoption of Industry 4.0 (IR4.0) technologies in the Malaysian manufacturing and service sectors, with a focus on Environmental, Social, and Governance (ESG) goals and firm competitiveness. Using a qualitative approach, semi-structured interviews were conducted with 14 participants (including CEOs, Managers, Directors, Founders and Top management) from 14 firms across five key states. A thematic analysis identified key factors influencing IR4.0 adoption, barriers, and competitive advantages. The findings reveal that while firms acknowledge the benefits of IR4.0 technology adoption in efficiency and ESG integration, challenges such as high costs, resistance to change, lack of innovative culture, and lack of digital skills hinder widespread adoption. The study contributes to business, industry and academic discussions on how digital transformation and ESG integration can enhance sustainability, operational efficiency and competitiveness in Malaysia’s manufacturing and service sectors. Policymakers should allocate more financial incentives, infrastructure support, and digital training programs to address the high costs and skills shortages that hinder IR4.0 adoption, especially among struggling firms. Collaborations between government, businesses, and academia should be strengthened to create a structured roadmap for Fifth Industrial Revolution (IR5.0) integration, ensuring Malaysia’s long-term competitiveness in the global economy.