ICT-based innovation and its competitive outcome: the role of information intensity
European Journal of Innovation Management
ISSN: 1460-1060
Article publication date: 9 November 2018
Issue publication date: 19 February 2019
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
:Emerald Publishing Limited
Copyright © 2018, Emerald Publishing Limited