Software development and innovation: Exploring the software shift in innovation in Swedish firms

Martin Andersson, Anna Kusetogullari () and Joakim Wernberg

Technological Forecasting and Social Change, 2021, vol. 167, issue C

Abstract: A number of scholars and industry professionals have claimed that there has been a ‘software-biased shift’ in the nature and direction of innovation, in that software development is a core part of innovation activities in firms across a wide array of industries. Empirical firm-level evidence of such a shift is still scant. In this paper, we employ new and unique firm-level survey data on the frequency and nature of software development among firms in Sweden, matched with the Community Innovation Survey (CIS). We find robust evidence supporting a software bias in innovation, in that software development is associated with a higher likelihood of introducing innovations, as well as higher innovation sales among firms in both manufacturing and service industries. Furthermore, this positive relationship is stronger for firms that employ in-house software developers than for those that only use external developers, suggesting that there is a hierarchy but possibly also a complementarity between in-house and external software development. We also find support for complementarity between software-based technology and human capital; the estimated marginal effect of software development on innovation is particularly strong for firms that combine in-house software development with a highly educated workforce in both STEM and other disciplines.

Keywords: Innovation; Software; Software development; Digitalization; Human capital; Software bias; Digital technology; Absorptive capacity (search for similar items in EconPapers)
JEL-codes: L25 O15 O32 O33 O43 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Working Paper: Software Development and Innovation ‒ Exploring the Software Shift in Innovation in Swedish Firms (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:tefoso:v:167:y:2021:i:c:s004016252100127x

DOI: 10.1016/j.techfore.2021.120695

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