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

Mario Benassi, Elena Grinza, Francesco Rentocchini and Laura Rondi

SPRU Working Paper Series from SPRU - Science Policy Research Unit, University of Sussex Business School

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 large firms filing 4IR patents at the European Patent Office (EPO). Our results, which control for a large number of patent- and firmlevel variables as well as firm fixed unobserved heterogeneity, show a significant and economically relevant positive association between the development of 4IR technologies and firm productivity. However, no significant relationship with firm profitability is detected, thereby suggesting that the returns from 4IR technological developments are slow to cash in. We also find that late innovators benefit more from the development of 4IR technological capabilities than early innovators and experience a substantial “boost effect”. We provide empirical support to an explanation of these findings in terms of the ability of late innovators 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)
Date: 2020-06
New Economics Papers: this item is included in nep-bec, nep-cse, nep-eff, nep-ino and nep-tid
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Working Paper: Going Revolutionary: The Impact of 4IR Technology Development on Firm Performance (2020)
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