Digital technologies and eco-innovation. Evidence of the twin transition from Italian firms

ABSTRACTABSTRACTThis paper investigates how the twin transition (digital & green) unfolds within firms by relating investments in digital technologies to the propensity of eco-innovating production processes and models. Drawing on a heterogeneous theoretical background, digital technologies can be hypothesised to enable eco-innovation across the board. However, a greater eco-innovation impact is expected from Artificial Intelligence and from bundling digital investments. Using the new Permanent Census of Firms of the Italian National Statistical Office, these hypotheses are tested on a large sample of more than 150,000 firms. Results confirm that the contribution of digital technologies to a firm's eco-innovation is mainly driven by investments in AI application areas, while investments in other digital technologies work more selectively. Moreover, new eco-innovative production processes and models benefit from bundling investments in different digital technologies, but with differences among firms of different size.KEYWORDS: Twin transitiondigital technologieseco-innovationartificial intelligenceIndustry 4.0JEL CODES: 030O32Q55Q57 AcknowledgementsThe data used in this work are from ISTAT sources and related to the survey: 'Censimento permanente delle Imprese' The elaborations were performed at the Laboratory for the Analysis of Elementary Data (ADELE) of ISTAT and in compliance with the legislation on the protection of statistical confidentiality and the protection of personal data. The results and opinions expressed are the sole responsibility of the authors and do not constitute official statistics. Where not expressly mentioned, the analyses are performed without using sample (population) weights.Disclosure statementNo potential conflict of interest was reported by the authors.