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ICT-based innovation and its competitive outcome: the role of information intensity

Paolo Neirotti (Department of Management and Production Engineering, Politecnico di Torino, Torino, Italy)
Danilo Pesce (Department of Management and Production Engineering, Politecnico di Torino, Torino, Italy)

European Journal of Innovation Management

ISSN: 1460-1060

Article publication date: 9 November 2018

Issue publication date: 19 February 2019

1472

Abstract

Purpose

Prior research highlights the vital role of Information and Communication Technologies (ICT) for innovation in response to environmental conditions. However, there is a lack of studies that analyse the determinants of ICT investments on the innovation activities of firms in relation with their impacts on the industrial and competitive dynamics using large data sets. The paper aims to discuss these issues.

Design/methodology/approach

In this paper, the authors investigate the effects of ICT investments on the industrial and competitive dynamics for a large and representative panel data set. All the industries are included, and lagged effects of ICT investments are studied. The model is tested on a seven-year panel (2008–2014) of 231 Italian industries using two-stage least squares instrumental-variables estimators with industry time and fixed effects.

Findings

The results indicate that munificent industries and higher ICT spending are interrelated facts, showing that in sectors with more growth opportunities firms invest more in ICT and this leads to higher industry concentration, greater profit dispersion and higher competitive turbulence in the sector. Also, the paper shows that SMEs can rarely take advantage of their ICT-based innovation to start high-growth phenomena.

Practical implications

The results suggest that ICT-based innovation may create competitive advantages that are hard to sustain over the long-term raising important implications for managers involved in ICT-enabled innovations and policy-makers involved in building programs to foster innovation.

Originality/value

Against the backdrop of today’s digital transformation, the paper enriches our understanding on the disruptive effects exerted by the digitalization of the innovation process and provides a base to continue the investigation of industrial changes and competitive dynamics.

Keywords

Acknowledgements

This work is partially supported by “Ministero dell’Istruzione, dell’Università e della Ricerca” Award “TESUN-83486178370409 finanziamento dipartimenti di eccellenza CAP. 1694 TIT. 232 ART. 6”.

Citation

Neirotti, P. and Pesce, D. (2019), "ICT-based innovation and its competitive outcome: the role of information intensity", European Journal of Innovation Management, Vol. 22 No. 2, pp. 383-404. https://doi.org/10.1108/EJIM-02-2018-0039

Publisher

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Emerald Publishing Limited

Copyright © 2018, Emerald Publishing Limited

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