Purpose This study investigates the impact of organizational characteristics on organizational performance through case studies of smart factory implementation in the context of Korean small and medium Enterprises (SMEs). To achieve this goal, this study adopts the smart factory index of KOSMO (Korea Smart Manufacturing Office) established by Korean Ministry of SMEs and Startups. We visited 3 firms implemented smart factory projects. This study presents the results of field study in detail with evaluation criteria on how organizational competences like AI technology adoption and facility automation can be exploited to positively influence organizational performance through smart factory implementation. Design/methodology/approach There are not so many results of empirical studies related to smart factories in Korea. This is because organizational support and user involvement are required for facility AI platform service beyond factory automation after the start of the 4th Industrial Revolution. Korean government's KOSMO (Korean Smart Manufacturing Office) has developed and proposed a level measurement index for smart factory implementation. This study conducts case studies based on the level measurement method proposed by KOSMO in the process of conducting case studies of three companies belonging to the root and mechanic industries in Korea. Findings The findings indicate that organizational competences, such as facility AI platform adoption and user involvement, are antecedents to influence smart factory implementation, while smart factory implementation has significant relationship with organizational performance. This study provides a better understanding of the connection between organizational competences and organizational performance through smart factory case studies. This study suggests that SMEs should focus on enhancing their organizational competences for improving organizational performance through implementing smart factory projects.