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

Mario Benassi, Elena Grinza, Francesco Rentocchini and Laura Rondi

No 720, SEEDS Working Papers from SEEDS, Sustainability Environmental Economics and Dynamics Studies

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.

Keywords: Fourth Industrial Revolution (4IR); patenting; technology development; firm performance; longitudinal matched patent-firm data (search for similar items in EconPapers)
JEL-codes: D24 J24 O33 (search for similar items in EconPapers)
Pages: 41 pages
Date: 2020-07, Revised 2020-07
New Economics Papers: this item is included in nep-bec, nep-cse, nep-eff, nep-ent, nep-gen, nep-ino and nep-tid
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http://www.sustainability-seeds.org/papers/RePec/srt/wpaper/0720.pdf Revised version, 2020 (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:srt:wpaper:0720

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