Is this time different? How Industry 4.0 affects firms’ labor productivity

Marco Bettiol (), Mauro Capestro (), Eleonora Di Maria () and Roberto Ganau ()
Additional contact information
Marco Bettiol: University of Padova
Mauro Capestro: University of Pavia
Eleonora Di Maria: University of Padova
Roberto Ganau: University of Padova

Small Business Economics, 2024, vol. 62, issue 4, No 9, 1449-1467

Abstract: Abstract Does Industry 4.0 technology adoption push firms’ labor productivity? We contribute to the literature debate—mainly focused on robotics and large firms—by analyzing adopters’ labor productivity returns when micro, small, and medium enterprises (MSME) are concerned. We employ original survey data on Italian MSMEs’ adoption investments related to a multiplicity of technologies and rely on a difference-in-differences estimation strategy. Results highlight that Industry 4.0 technology adoption leads to a 7% increase in labor productivity. However, this effect decreases over time and is highly heterogeneous with respect to the type, the number, and the variety of technologies adopted. We also identify potential channels explaining the labor productivity returns of technology adoption: cost-related efficiency, new knowledge creation, and greater integration/collaboration both within the firm and with suppliers. Plain English Summary Becoming Industry 4.0 technology adopter boosts Italian manufacturing micro, small, and medium enterprises’ (MSME) labor productivity by more than 7% on average. This is the key finding of new research based on original survey data collected from a sample of MSMEs operating in “Made in Italy” industries. Specifically, the research suggests that brand-new adopters of Industry 4.0 technologies gain a labor productivity premium compared to their non-adopting counterparts that lasts for up to 2 years after the adoption occurred. However, the productivity returns of technology adoption show non-linearities with respect to both the number of new technologies adopted by the firm and the variety of “technology groups” (production, customization, and data processing technologies). Overall, these results point to the relevance of industrial policies promoting the adoption of Industry 4.0 technologies by MSMEs, and this seems to be particularly the case for all those countries where MSMEs make the bulk of the national industrial system.

Keywords: Technology adoption; Labor productivity; MSME; Industry 4.0; Italy (search for similar items in EconPapers)
JEL-codes: J24 L23 L25 O32 (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://link.springer.com/10.1007/s11187-023-00825-8 Abstract (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:kap:sbusec:v:62:y:2024:i:4:d:10.1007_s11187-023-00825-8

Ordering information: This journal article can be ordered from
http://www.springer. ... 29/journal/11187/PS2

DOI: 10.1007/s11187-023-00825-8

Access Statistics for this article

Small Business Economics is currently edited by Zoltan J. Acs and David B. Audretsch

More articles in Small Business Economics from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().