Unveiling the impact of the adoption of digital technologies on firm's innovation performance

This study aimed to understand whether the increased use of digital technologies improves innovation performance of firms. Previous studies reveal that the more the firms use digital technologies, the more they can be potentially innovative. However, this is a myth. In fact, one of the main limitations of such studies is their undifferentiated approach toward the vast ocean of digital technologies. Yet, given the increasing pervasiveness of digital technologies at all levels, business and society, a question emerges: how they impact the capability of firms to be innovative? Counter-intuitively, we argue that most frequently used digital technologies have very low impact on innovation performance of firms as innovation is the result of creativity and of constant R&D efforts. By contrast, excess use of digital technologies may even deplete the long-run innovation capability of firms, for instance, by impoverishing the relational capital. We performed two different statistical analysis to understand whether this intuition was grounded and hypotheses would be confirmed. First, we used a principal component analysis to identify the digital technologies that are salient for innovation performance. Second, we conducted a multivariate analysis of variance to understand if the identified technologies predicted innovation performance. All tests were conducted on a large-scale sample of firms operating the European Union. The findings confirmed that digital technologies have very low impact on innovation performance, whilst R&D expenses are the most reliable predictor of innovation. These results challenge the false belief that digital technologies improve innovation performance. At a practical level, the results suggest that decision makers should debias themselves from considering digital technologies as the ultimate ingredient for a successful innovative firm, as this may backfire eventually.