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

45 Pages Posted: 16 Jun 2020 Last revised: 7 Aug 2020

See all articles by Mario Benassi

Mario Benassi

University of Milan - Department of Economics, Management and Quantitative Methods (DEMM)

Elena Grinza

University Of Milan

Francesco Rentocchini

Southampton Business School, University of Southampton

Laura Rondi

Politecnico di Torino

Date Written: June 12, 2020

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 firm-level 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

JEL Classification: O33, D24, J24

Suggested Citation

Benassi, Mario and Grinza, Elena and Rentocchini, Francesco and Rondi, Laura, Going Revolutionary: The Impact of 4IR Technology Development on Firm Performance (June 12, 2020). SWPS 2020-08, Available at SSRN: https://ssrn.com/abstract=3625592 or http://dx.doi.org/10.2139/ssrn.3625592

Mario Benassi (Contact Author)

University of Milan - Department of Economics, Management and Quantitative Methods (DEMM) ( email )

Via Conservatorio, 7
Milan, 20122
Italy

Elena Grinza

University Of Milan ( email )

Via Conservatorio 7
Milan, 20122
Italy

Francesco Rentocchini

Southampton Business School, University of Southampton ( email )

University Rd.
Southampton SO17 1BJ, Hampshire SO17 1LP
United Kingdom

Laura Rondi

Politecnico di Torino ( email )

Department of Management
Corso Duca degli Abruzzi, 24
Torino, 10129
Italy
+39 011 0907232 (Phone)

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
3
Abstract Views
117
PlumX Metrics