Digitalization transforms the business environment, and organizations face challenges to make progress. The initial step to support organizations is to evaluate their readiness, resources, and capabilities for improvement. Drawing on the resource-based view (RBV) theory, the purpose of this study is to empirically analyze the effect of digitalization of Total Quality Management (TQM) or Quality 4.0 on industry 4.0 (I4.0) readiness and actual practices of I4.0 with firm size as a moderator. Based on data from 228 respondents, the study model was empirically validated in Malaysian small-medium enterprises. The results revealed that soft TQM (top management commitment (TMC) and human resource management (HR) and hard TQM practices; process management (PM) and quality information & analysis (QIA)) are positively associated with I4.0 readiness that further improves the actual practices of I4.0. Contrary to our expectations, education and training have no significant effect on I4.0 readiness. The results also show the mediating role of I4.0 readiness between TMC and QIA with the actual practice of I4.0. Furthermore, firm size significantly moderated the proposed relationships. The established framework helps managers to anticipate their management decisions� effects on those results affecting I4.0. © 2022 Informa UK Limited, trading as Taylor & Francis Group.