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Going Revolutionary: The Impact of 4IR Technology Development on Firm Performance

Author

Listed:
  • Mario Benassi

    (Department of Economics, Management, and Quantitative Methods, University of Milan)

  • Elena Grinza

    (Department of Management and Production Engineering, Politecnico di Torino)

  • Francesco Rentocchini

    (Department of Economics, Management, and Quantitative Methods, University of Milan)

  • Laura Rondi

    (Department of Management and Production Engineering, Politecnico di Torino)

Abstract

Drawing on the knowledge-based view of the firm, we investigate whether firm performance is related to the accumulated stock of technological knowledge associated with the Fourth Industrial Revolution (4IR), and what contextual factors affect this relationship. We test our research questions on a longitudinal matched patent-firm data set on medium and large firms filing 4IR patents at the European Patent Office (EPO). Our results show a significant and economically relevant positive association between the development of 4IR technologies and firm productivity, but no relationship with its profitability, thereby suggesting that the returns from costly technological investments are slow to cash in. We also find that late entrants benefit more from the development of 4IR technological capabilities than early entrants and experience a substantial “boost effect”. We provide empirical support to an explanation of these findings in terms of the ability of late entrants to (i) manage the inherent complexity of the bundle of technologies comprising the 4IR and (ii) exploit profitable downstream applications of the 4IR.

Suggested Citation

  • Mario Benassi & Elena Grinza & Francesco Rentocchini & Laura Rondi, 2020. "Going Revolutionary: The Impact of 4IR Technology Development on Firm Performance," SEEDS Working Papers 0720, SEEDS, Sustainability Environmental Economics and Dynamics Studies, revised Jul 2020.
    • Handle: RePEc:srt:wpaper:0720
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    Cited by:

    1. Napolitano, Lorenzo & Sbardella, Angelica & Consoli, Davide & Barbieri, Nicolò & Perruchas, François, 2022. "Green innovation and income inequality: A complex system analysis," Structural Change and Economic Dynamics, Elsevier, vol. 63(C), pages 224-240.
    2. Davide Castellani & Fabio Lamperti & Katiuscia Lavoratori, 2022. "Measuring adoption of industry 4.0 technologies via international trade data: insights from European countries," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 49(1), pages 51-93, March.
    3. Maria Savona, 2020. "The Saga of the Covid-19 Contact Tracing Apps: Lessons for Data Governance," SPRU Working Paper Series 2020-10, SPRU - Science Policy Research Unit, University of Sussex Business School.

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    Keywords

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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
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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