The Interactions Between Digitalization, Innovation and Employment in European Companies: Insights from a Latent Class Analysis

Adina-Maria Vodă, Mihai Ciobotea, Doina Badea (), Monica Roman and Marian Stan
Additional contact information
Adina-Maria Vodă: Department of Statistics and Econometrics, Bucharest University of Economic Studies, 010371 Bucharest, Romania
Mihai Ciobotea: Department of Statistics and Econometrics, Bucharest University of Economic Studies, 010371 Bucharest, Romania
Doina Badea: Department of Statistics and Econometrics, Bucharest University of Economic Studies, 010371 Bucharest, Romania
Monica Roman: Department of Statistics and Econometrics, Bucharest University of Economic Studies, 010371 Bucharest, Romania
Marian Stan: Department of Statistics and Econometrics, Bucharest University of Economic Studies, 010371 Bucharest, Romania

Economies, 2025, vol. 13, issue 4, 1-19

Abstract: There is increasing concern regarding the association between technological change and jobs. This study explores how different patterns of digitalization and innovation relate to job creation in European companies. We use data from the European Company Survey 2019 collected by Eurofound and Cedefop. We apply Latent Class Analysis (LCA) to identify the typologies of companies, mainly based on their level of technology adoption, innovation practices and employment patterns. We showcase four distinct classes of companies: moderate adoption of digital technology and strong international orientation, traditional and local, medium digitalization, process innovative with local focus and digital leaders and innovators, with specific patterns regarding digitalization, innovation and job creation. The digital leaders and innovators class revealed a high level of digitalization and innovation and maintained stable employment levels, with increased investments in staff training and tendency towards automation. Conversely, less-digitalized traditional companies are more susceptible to stagnation or employment decline. In general, the employment outlook is stable, without significant employment growth, signaling the need for balanced investments in innovation and digitalization that stimulate more and better jobs. This is the first study to apply LCA to explore complex relationships between digitalization, innovation, foreign trade, training investments and employment trends and offers fresh insights into company views towards employment in the digital era.

Keywords: digitalization; employment; human capital; innovation; latent class analysis; job creation (search for similar items in EconPapers)
JEL-codes: E F I J O Q (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.mdpi.com/2227-7099/13/4/104/pdf (application/pdf)
https://www.mdpi.com/2227-7099/13/4/104/ (text/html)

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:gam:jecomi:v:13:y:2025:i:4:p:104-:d:1630245

Access Statistics for this article

Economies is currently edited by Ms. Hongyan Zhang

More articles in Economies from MDPI
Bibliographic data for series maintained by MDPI Indexing Manager ().