Firms’ digitalization and innovation strategies

Loles Añón Higón, Juan A. Máñez, Amparo Sanchis and Juan A. Sanchis
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Loles Añón Higón: Department of Applied Economics II and ERICES, Faculty of Economics (Universitat de València), Avda. Tarongers, s/n, 46022 Valencia (Spain)
Juan A. Máñez: Department of Applied Economics II and ERICES, Faculty of Economics (Universitat de València), Avda. Tarongers, s/n, 46022 Valencia (Spain)
Amparo Sanchis: Department of Applied Economics II and ERICES, Faculty of Economics (Universitat de València), Avda. Tarongers, s/n, 46022 Valencia (Spain)
Juan A. Sanchis: Department of Applied Economics II and ERICES, Faculty of Economics (Universitat de València), Avda. Tarongers, s/n, 46022 Valencia (Spain)

No 2512, Working Papers from Department of Applied Economics II, Universidad de Valencia

Abstract: We examine the role of digitalisation in shaping innovation strategies. To capture the multidimensional nature of digital transformation, we construct a firm-level digitalisation index that incorporates four dimensions: technological infrastructure, digital human capital, automation and digital stakeholders’ interactions. Using data from Spanish manufacturing firms for the period 2007-2022, we assess the effects of digitalisation on both technological innovation (product and process) and non-technological (organisational and marketing) innovation. Our empirical strategy is based on a knowledge production function framework that jointly analyses firms' innovation decisions while accounting for unobserved heterogeneity and potential endogeneity of digitalisation. The results show that digitalisation is a key driver of innovation, in particular for SMEs, but also for firms without formal R&D activities. However, its impact varies across innovation types, with the strongest effects observed for process innovation. The analysis further reveals that the components of digitalisation affect innovation strategies in different ways, underscoring the heterogeneous nature of digital transformation.

Keywords: Digital transformation; manufacturing firms; product innovation; process innovation; organisational innovation; marketing innovation. (search for similar items in EconPapers)
JEL-codes: C35 D22 L60 O32 O33 (search for similar items in EconPapers)
Date: 2025-10
New Economics Papers: this item is included in nep-cse, nep-eur, nep-ino, nep-sbm and nep-tid
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