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Firms’ digitalization and innovation strategies

Author

Listed:
  • Loles Añón Higón

    (Department of Applied Economics II and ERICES, Faculty of Economics (Universitat de València), Avda. Tarongers, s/n, 46022 Valencia (Spain))

  • Juan A. Máñez

    (Department of Applied Economics II and ERICES, Faculty of Economics (Universitat de València), Avda. Tarongers, s/n, 46022 Valencia (Spain))

  • Amparo Sanchis

    (Department of Applied Economics II and ERICES, Faculty of Economics (Universitat de València), Avda. Tarongers, s/n, 46022 Valencia (Spain))

  • Juan A. Sanchis

    (Department of Applied Economics II and ERICES, Faculty of Economics (Universitat de València), Avda. Tarongers, s/n, 46022 Valencia (Spain))

Abstract

We examine the role of digitalisation in shaping innovation strategies. To capture the multidimensional nature of digital transformation, we construct a firm-level digitalisation index that incorporates four dimensions: technological infrastructure, digital human capital, automation and digital stakeholders’ interactions. Using data from Spanish manufacturing firms for the period 2007-2022, we assess the effects of digitalisation on both technological innovation (product and process) and non-technological (organisational and marketing) innovation. Our empirical strategy is based on a knowledge production function framework that jointly analyses firms' innovation decisions while accounting for unobserved heterogeneity and potential endogeneity of digitalisation. The results show that digitalisation is a key driver of innovation, in particular for SMEs, but also for firms without formal R&D activities. However, its impact varies across innovation types, with the strongest effects observed for process innovation. The analysis further reveals that the components of digitalisation affect innovation strategies in different ways, underscoring the heterogeneous nature of digital transformation.

Suggested Citation

  • Loles Añón Higón & Juan A. Máñez & Amparo Sanchis & Juan A. Sanchis, 2025. "Firms’ digitalization and innovation strategies," Working Papers 2512, Department of Applied Economics II, Universidad de Valencia.
    • Handle: RePEc:eec:wpaper:2512
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    JEL classification:

    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
    • C35 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis

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