Structural Change and Economic Dynamics 66 (2023) 89–105

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Structural Change and Economic Dynamics

journal homepage: www.elsevier.com/locate/strueco

The adoption of digital technologies: Investment, skills, work organisation

Valeria Cirillo a, b, *, Lucrezia Fanti e, Andrea Mina b, c, Andrea Ricci d
a
Department of Political Sciences, University of Bari ’Aldo Moro’, Bari, Italy
b
Institute of Economics and EMbeDS, Scuola Superiore Sant’Anna, Pisa, Italy
c
Centre for Business Research, University of Cambridge, Cambridge, United Kingdom
d
Istituto Nazionale per l’Analisi delle Politiche Pubbliche (INAPP), Rome, Italy
e
Department of Economic Policy, Università Cattolica del Sacro Cuore, Milan, Italy

A R T I C L E I N F O A B S T R A C T

JEL codes: New digital technologies are shaping the transformation of production activities. This process of change is
D20 characterised by growing digitization, inter-connectivity and automation. The diffusion of new technologies is,
L23 however, very uneven, and firms display different adoption behaviours. By using data on a representative sample
O33
of Italian firms, we explore the patterns and determinants of new digital technology adoption. We build our
Keywords: theoretical framework on the nexus between technology, skills and the organisation of work. We then provide
Digital technologies
novel econometric evidence on the positive effects of education and training. Among the notable results of the
Industry 4.0
Skills
paper, labour flexibility does not seem to favour new technology adoption, whereas second-level collective
Work organisation bargaining plays a positive role in the process. Results also show heterogeneous effects between large vs. small
and medium-size firms, and between manufacturing and service sectors.

1. Introduction may or may not lead to a radically new ‘techno-economic paradigm’

Modern production technologies are characterised by increased
digitization, automation and interconnectivity (Brynjolfsson and McA­
fee, 2014; Ford, 2015). These characteristics have been associated with
disruptive process innovations that have been qualified as new ‘enabling
technologies’ (Teece, 2018). Martinelli et al. (2021) argue that these
digital technologies can be defined as emergent technologies displaying
some of the characteristics of general purpose technologies (GPTs)
(Bresnahan and Trajtenberg, 1995; Jovanovich and Rousseau, 2005;
Bresnahan, 2010), but are not yet fully developed GPTs and are deeply
dependent on the broader ICT paradigm where they function. In Europe
these technologies are often subsumed in the policy debate under the
umbrella term ‘Industry 4.0’. This concept, which has roots in German
industrial policy, captures the convergence of new operational tech­
nologies with Internet-driven IT, and marks a shift of production systems
towards the ‘smart factory’ of the future (Kagermann et al., 2013).
It is difficult to ascribe to a common matrix all the new digital
technologies. These include a complex set of devices over a broad con­
tinuum of production possibilities, and production choices are arguably
conditional on infrastructures and firm organization. While it remains to
be seen whether particular configurations of ‘enabling technologies’
(Dosi, 1988; Freeman and Perez, 1988), there can be no doubt that the
high recombinatorial potential of digital technologies can foster new
ways of performing economic activities. The ability of companies to
select and exploit new sources of competitive advantage is, therefore, a
likely determinant of growth because of the expected
performance-enhancing attributes of these enabling technologies.
In this contribution we focus on the technology adoption choices
made by individual firms. While information on the production of new
technologies is usually available on a large scale from standard firm-
level data, or could be derived from the examination of patent re­
cords, information on market diffusion is much rarer. This is a serious
shortcoming for research and for evidence-based policy because it is
diffusion, rather than invention or innovation, the broad manifestation
of Schumpeterian structural change in the economy (Metcalfe, 1998;
Stoneman and Battisti, 2010). Even though important work exists on the
diffusion of robots, for which the International Federation of Robotics
provides aggregate data (Acemoglu and Restrepo, 2020; Dauth et al.,
2017), the analyses of individual firm choices has proved much more
difficult, as clearly pointed out by Seamans and Raj (2018). To
contribute to this important and under-researched aspect of the digital
economy, we explore a large and unique firm-level survey of Italian

* Corresponding author.
E-mail address: valeria.cirillo@uniba.it (V. Cirillo).

https://doi.org/10.1016/j.strueco.2023.04.011
Received 12 July 2022; Received in revised form 14 April 2023; Accepted 15 April 2023
Available online 16 April 2023
0954-349X/© 2023 Elsevier B.V. All rights reserved.
V. Cirillo et al.
Fig. 1. Percentage of firms investing in I4.0 technologies.
Note: sampling weights applied. Source: Authors’ elaborations on RIL 2015–2018 panel data
businesses: the survey “Rilevazione Imprese e Lavoro – RIL” (Longitu­
dinal Survey of Businesses and Work), run by the Italian National
Institute for the Analysis of Public Policies (INAPP). The survey contains
specific questions on different digital technologies acquired by firms,
thus offering a unique opportunity to study the determinants of adoption
of new enabling technologies.
The specific focus of the paper is the nexus between technology, skills
and the organisation of work. This is a fundamental aspect of the debate
about the disruptive potential of new digital technologies because the
skills profile of firms filters the penetration of technical change in the
economy and lay the foundations for the productivity gains that could be
generated in the process (Acemoglu, 2002; Link and Siegel, 2003). After
describing the aggregate patterns of adoption, we perform an econo­
metric analysis of the role of skills, distinguishing between formal
human capital endowments and on-the-job training, and the role of two
essential aspects of the organisation of work within the firm: the use of
temporary contracts and the role of second-level (i.e. decentralised)
bargaining in the governance of the firm. Many empirical contributions
have highlighted the patterns of complementarity between high-skilled
workers and information technologies (among others, Autor et al., 2000;
Bresnahan et al., 2002; and Fabiani et al., 2005; Piva et al., 2005, for
Italy). This body of empirical evidence seems to lend broad support to
the skill-bias technical hypothesis (Acemoglu, 2002). So far very few
studies have, however, been able to extend this line of enquiry to new
digital technologies, and consider from a large-scale quantitative
perspective the joint role of skills and work organisation in firm adop­
tion.1 This study contributes to filling this gap in the literature.
The paper is organised as follows: in the first section we review the
literature on technology adoption and skills to frame our research
questions and derive testable hypotheses (Section 2). In Section 3 we
present the data and provide some descriptive evidence on diffusion
1
The few works that address this issue include Calvino et al. (2022)
inspecting the role of workers’ skills as well as management capabilities, and
accumulation of intangible assets as main drivers of digital technologies in the
Italian economy.
90
Structural Change and Economic Dynamics 66 (2023) 89–105
among Italian firms (section 2.2). Section 4 presents the empirical
strategy; while Section 5 contains the results of our econometric ana­
lyses. Section 6 concludes by drawing attention on the strategic and
policy implications of the study, and by identifying new avenues for
future research.
2. Background literature and hypotheses
In the study of technical change, several factors have been identified
as drivers of technology adoption choices, and much has been written on
how these choices translate into aggregate patterns of technology
diffusion (for comprehensive reviews of this literature, see Karshenas
and Stoneman, 1993; Hall and Khan, 2003; Stoneman and Battisti,
2010).2 among the drivers of adoption, we can distinguish between: i)
supply-side factors, including improvements of older technologies
leading to incremental innovations or changes in the use of existing
technologies (Gruber and Verboven, 2001); ii) factors related to the
demand for new technologies, such as technological complementarities
between producers and users, and the adopters’ stock of tangible and
intangible capital (Rosenberg, 1976); iii) specific (internal) character­
istics of the firm, such as size,3 age, and human resource management
practices (Bloom et al., 2012); iv) sectoral heterogeneities between
manufacturing and services (Comin and Mestieri, 2013; Calvino et al.,
2018; Cirillo et al., 2022a); and finally v) the external organisation of the
firm and the institutional context in which businesses operate (Dosi,
1991; Mowery and Rosenberg, 1993). More broadly, the co-evolution of
2
The literature on this topic is very rich, starting at least from the pioneering
contributions of Rogers (1962), Mansfield (1968), David (1969), Davies (1979),
Metcalfe (1981) and Stoneman (1981), but its coverage is well beyond the
scope of this paper.
3
Firm size is indeed one of the main characteristics accounting for different
adoption patterns of digital technologies. As we show in Section 3 and Section
4, firm size is particularly relevant in countries such as Italy, where SMEs
represent the largest share of production infrastructures, leading to a slower
aggregate innovation and technology adoption rate (Bugamelli et al., 2012;
ISTAT, 2017; ISTAT, 2018).
V. Cirillo et al.
Fig. 2. Percentage of firms investing in I4.0 technologies.
Note: sampling weights applied. Source: Authors’ elaborations on RIL 2015–2018 panel data
organizational capabilities and economic environment shapes the
sources of competitive advantage (Nelson and Winter, 1982; Dosi et al.,
2000; Dosi and Marengo, 2015). Indeed, the sector and size dimensions
can be linked to the concept of absorptive capacity (Cohen and Levin­
thal, 1990) in explaining the patterns of technology adoption and
diffusion. We speculate that factors such as skills, tasks, work organi­
zation at the core of our analysis are likely to accelerate the adoption
processes when interacted with structural elements. Sectors are char­
acterized by distinct trajectories, specific vertical linkages and techno­
logical regimes (Pavitt, 1984; Archibugi, 2001; Laursen and Meliciani,
2002; Marsili and Verspagen, 2002; Malerba, 2002). Therefore, it is
important to disentangle how and to which extent workforce and
organizational factors interact with demand conditions and structural
factors. From this point of view, a growing literature has pointed to some
major specificities that make the innovation process in services mark­
edly different from that of manufacturing, and has emphasized the
increasing interdependence between the manufacturing and service
branches of the economy (Evangelista, 2000; Guerrieri and Meliciani,
2005; Castellacci, 2008).4
An important stream of contributions has specifically focused on the
interplay between technology and human capital (OECD 2011), proxied
by workers’ education levels as in standard human capital theory
(Becker 1994) or conceptualised as workers’ knowledge and routines
from an evolutionary perspective (Nelson and Winter, 1982; Winter,
1997; Dosi and Marengo, 2015). Human capital can be accumulated
through investments in education, training and any other means that
improve the employees’ ability to provide labour services. Becker
4
At least two groups of studies highlight the relevance of the sector dimen­
sion. On the one hand, there are those that focus on sector-specific techno­
logical regimes, and identify features that distinguish innovative activities and
industrial dynamics across sectors by looking at technological opportunities,
knowledge bases, cumulativeness and appropriability conditions (Marsili and
Verspagen, 2002; Malerba, 2002; Dosi et al., 2006). On the other hand, there
are studies that look at patterns of industrial dynamics and emphasize the
relationship between sector-specific developmental paths and a variety of firm
innovation strategies (e.g. Pavitt, 1984). Building on this tradition, we expect
heterogeneous findings when comparing adoption strategies in manufacturing
and in service industries.
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Structural Change and Economic Dynamics 66 (2023) 89–105
(1994) distinguished between ‘specific human capital’, referring to skills
or knowledge that is useful only to a single employer, and ‘general
human capital’ that is useful to many employers. In the case of general
skills, theory suggests that the rewards for acquiring them accrue to the
employee in the form of higher wages, as determined by the market
(Prais, 1995). This reflects both the higher value of a skilled employee’s
contribution to the production process, and the cost (in time or money
terms) of training, which is shared by the employee. Specific skills, on
the other hand, are only of value in a particular instance of employment,
and are the result of ad-hoc training in a specific production context.
Innovations may also require very specific skill sets that do not yet
exist in the labour market. In this case workers have no direct incentive
to develop these skills because they are not immediately tradable, so the
cost of training falls on the employer. If, however, the employer is un­
able to fully appropriate the value of innovation and imitators can enter
the market, skills that started as ‘specific’ can become more ‘general’,
and if these are only available in short supply, they will attract a high
market premium. Given the uncertainty surrounding the benefits of new
technologies, and the heterogeneity of firm capabilities, calculations of
rates of return to skills will vary greatly and will contain large error
margins.
It is difficult to disentangle the skills that drive innovation from those
which are demanded as a result of change brought about by innovation
(Tether et al., 2005; Leiponen, 2005). It is nevertheless possible to ask
which skill sets are more suitable for the adoption of new digital tech­
nologies as part of firm-specific strategies. Firms have to anticipate skills
needs in preparation for particular technology choices, and are bound in
their technology choices by path-dependent human capital endow­
ments. Firms that chose to digitize all or part of their activities may
consider their position in the supply chain and identify an opportunity to
achieve productivity gains. We argue that in making this strategic
choice, firms recognise that these gains may only be realised if skilled
workers are able to use new technologies. In this sense, skilled workers
foster the generation of productivity gains from the use of new tech­
nologies. Therefore, we propose the following baseline hypothesis:
HP1. Firms with more skilled employees are more likely to invest in
new digital technologies.
As we have already suggested, extensive theoretical and empirical
V. Cirillo et al. Structural Change and Economic Dynamics 66 (2023) 89–105

Table 1 plausible hypothesis that can be made for the new digital technologies
Percentage of firms investing in I4.0 tech by firm size and geographical area. follows the expectation that firms planning changes in production are
Firm size IoT Robotics Big Data Augmented Cybersecurity more likely to prepare their workers by updating or upgrading their skill
Analytics reality sets to fully capture the benefits of new technologies.6 Even though
5− 9 6.4 2.6 3.4 1.9 29.3 technical change always entails an element of uncertainty also in
10–49 7.6 5.9 6.7 2.7 34.9 diffusion processes, it can argue that firms expect technologies to require
50–249 14.0 14.1 14.3 4.7 53.4 contextual adjustments and may benefit from having training pro­
> 250 28.1 21.8 27.4 9.4 68.2 grammes in place. For this reason, we posit that:
Total 7.7 5.1 5.9 2.5 33.9
Geographical HP2. The share of workers with on-the-job training has a positive ef­
area
fect on the adoption of new digital technologies.
North West 8.3 5.8 5.6 3.4 38.9
North East 8.8 6.1 6.1 2.1 34.2 A related aspect of the decision to adopt new technologies is the
Centre 7.0 3.9 6.8 2.2 29.1
organisation of labour (Nelson and Winter, 1982; Osterman, 1994).
South 5.8 3.4 5.0 2.0 29.7
Total 7.7 5.1 5.9 2.5 33.9 Qualitative evidence on the processes of organisational adaptation in­
dicates that this is as a necessary condition for the generation of pro­
Note: sampling weights applied. Source: Authors’ elaborations on RIL
ductivity gains and competitive advantage stemming from the use of
2015–2018 panel data.
new enabling technologies (Fabbri et al., 2018). Process technologies,
such as ‘Industry 4.0’ technologies, tend to be accompanied by organ­
literature indicates that the skills mix of firms is partly dependent on isational changes consistent with the principles of ‘lean production’
workers’ formal education and partly generated through specific in­ (Womack et al., 1990). This is an argument clearly made by Bresnahan
vestments in training. Several studies point to the role of high-skilled et al. (2002) in their seminal paper on the combination of computeri­
and highly-trained human capital as key drivers of innovative activity zation, workplace organization and increased demand for skilled
and organizational change (see among others Leiponen, 2005; Lundvall, workers. Complementarity drove clusters of structural adjustments in
2009; Toner, 2011). High-quality human capital generates strong modern firms. More specifically, the use of information and communi­
absorptive capacity (Cohen and Levinthal 1990) and is also associated cation technologies is positively correlated with increases in the demand
with the presence of new managerial practices (Böckerman et al., 2012) for various indicators of human capital and workforce skills. Moreover,
guiding the introduction of new capabilities and new organizational it can show patterns of correlations with specific forms of work orga­
routines. While a firm’s absorptive capacity is more than the sum of the nization that include higher levels of labour flexibility and the use of
absorptive capacities of its employees (Cohen and Levinthal, 1990), it is short-term labour contracts.
related to the skills of employees, including those who stand at the On the one hand, labour flexibility can help firms to adjust quickly to
interface between the firm and its external environment. In case of rapid new technological requirements by allowing rapid changes to their de­
and uncertain technical change, a deep knowledge base and/or some mand for labour (Bartelsman et al., 2016). This is often seen as an agile
predisposition for change might be required for effective communica­ way to optimize on labour endowments when production lines and
tion with technology experts or to capture, assimilate and exploit new whole firm sub-units are restructured to meet new market needs or in the
information for productive purposes.5 presence of increased market competition. On the other hand, evidence
Whereas general human capital can be acquired through the market exists that more flexible (internal) labour markets can hamper innova­
process, more specific skills, tailored to the exact requirements of the tion at both firm and sector levels (see for example Kleinknecht et al.,
firm, can only be developed through training. As we expect skills to have 2014, Cetrulo et al., 2019, Hoxha and Kleinknecht, 2020). More reliance
a positive effect on adoption, we also expect training to favour the on temporary workers might lower the probability to invest in new
acquisition of new enabling technologies. The contribution of formal enabling technologies because it is more compatible with cost compet­
education levels and training varies across firms and sectors, depending itiveness strategies rather than higher-value added models of techno­
on the relative importance of ‘Occupational Labour Markets’ vs. ‘Inter­ logical advantages (Michie and Sheehan, 2003; Castro Silva and Lima,
nal Labour Market’ mechanisms of human capital upgrading (Rubery 2019). The accumulation of knowledge would thus be hampered by
and Grimshaw, 2003). The former depends on nationally recognized frequent employees turnover, preventing the attainment of productivity
qualifications; the latter is designed and organised as on-the-job training gains derived from idiosyncratic activities of learning by doing.7
by individual employers in accordance with their specific needs. All in all, we expect that continuous accumulation of tacit knowledge
Skills upgrading through training is beneficial to the adoption of new about production processes is important for the adoption of enabling
technologies because embodied technical change can only generate technologies and therefore we hypothesise that:
productivity gains it is successfully integrated in contextual production
processes (Boothby et al., 2010). Whenever skills requirements are HP3. The use of flexible staff arrangements has a negative effect on the
firm-specific, or in a context with stronger labour market frictions, adoption of new digital technologies.
training is the relative more efficient solution (Ramachandran, 1993; The final aspect to which we draw our attention is the role of firm
Hamermesh and Pfann, 1996). Moreover, in the complex cognitive
process of adaptation to radical new technologies (Raffaelli et al., 2019),
training can shape workers’ perception of a new technology and influ­ 6
Naturally, the two mechanisms can also coexist in a more ‘systemic inte­
ence their attitude to change (Ouadahi, 2008). It is interesting to notice gration model’, for example combining higher-level science and engineering
that there are contrasting results in the literature on ICT adoption and skills of a small group of workers with highly trained employees. For the sake of
training: for example, Arvanitis (2005) found evidence of complemen­ clarity, however, it is important to stress that we take into account general
tary between investment in information technology and training, training, which may or may not be targeted to the usage of enabling or digital
whereas Giuri et al. (2008) did not. We would argue that the most technologies, the underlying idea being that firms characterized by a higher
emphasis on training are those presenting the more favourable organisational
environments for the adoption of new technologies.
7
It is also possible that flexible work is applied by firms to non-core tasks.
5
Along a similar line of research, McGuirk et al. (2015) have recently ana­ However, while this may be the case of large firms, it is a more unlikely
lysed the role of ‘Innovative Human Capital’, measured it as a combination of behaviour among small firms, which are less diversified and less complex or­
education, training, but also willingness to change and job satisfaction, upon ganisations. We are going to subject this conjecture to empirical tests in the
small firms’ propensity to innovate. analysis of heterogeneous effects in Section 4.

92
V. Cirillo et al.
governance in shaping technology adoption decisions. Companies that
plan to change or upgrade production technologies need to adapt ca­
pabilities and skills as quickly as possible, and this may entail changes in
wages and the content of work. The structure of decision-making pro­
cesses within firms can therefore have significant effects on the outcome
of specific investment decisions. Company-level bargaining can be more
flexible and versatile than centralized bargaining, thus offering some
advantages in more dynamic environments (Appelbaum and Berg,
1999). This is especially relevant when investment decisions concern
new technologies.
Lean production models associated with digital transformations
require a relatively high level of adaptation that might be negotiated
more easily at the company level rather than at the sectoral or national
level. Company-level bargaining may cover specific topics such as
workers’ involvement, changes in work organisation, working hours,
work roles, workloads, vocational training, and productivity premia.8 As
already noted by Freeman and Medoff (1984) and Metcalf (2003),
economic theories have not been able to predict unambiguously the
impact of bargaining (and more generally unionisation) on firms.
Second-level (i.e. company-level) bargaining could both increase or
decrease productivity. One might expect negative effects when the
conflictual behaviour of a trade union prevails; conversely, one might
expect a positive impact if workplace unionism and collective bargai­
ning are set in a localised collaborative and participatory environment.
Several studies contain empirical investigations of the link between
company-level agreements and firm performance (Frick and Möller,
2003; Fairris and Askenazy, 2010; Jirjahn and Mueller, 2014; Devicienti
et al., 2017; Antonietti et al., 2017; Damiani et al., 2018; Garnero et al.,
2019), but the evidence is contradictory and overall inconclusive.
Divergent results have also been found by several studies of the relation
between collective bargaining and innovation (see Menezes-Filho and
Van Reenen, 2003; Addison and Wagner, 1997; FitzRoy and Kraft, 1990;
Schnabel and Wagner, 1994).
Kleinknecht (2020) argues that decentralised bargaining would
hamper innovation because it can induce firms to use downward wage
flexibility rather that innovation or technology adoption to remain
competitive. In a rare contribution specifically focused on digital tech­
nologies and based on establishment survey data and employee data,
Genz et al. (2019) have recently found a strong negative relation be­
tween work councils and investments in Industry 4.0 technologies in
Germany. The implementation of digital technologies broadens the re­
sponsibility of work councils to mediate the conflict between employees
and management. Work councils can exert veto rights with respect to the
implementation of digital technologies and can narrow the freedom of
action of management. They tend to support the implementation of
digital technologies only in those establishments characterised by a high
share of workers performing physically demanding jobs or subject to
competitive pressures (Genz et al., 2019).
Building on a qualitative research approach and in-depth interviews
with trade unions’ delegates and managers of Italian companies, Cirillo
et al. (2021) detect instead a lack of trade unions’ involvement in the
design phase of Industry 4.0 artefacts, regardless of the degree of digi­
talisation and robotisation in action. However, the authors also suggest
that trade unions play a key role in the implementation of new tech­
nologies by encouraging workers’ acceptance and adaptation.
Second-level bargaining could therefore allow firms to better appro­
priate the gains of technological and organisational improvements.
Through the implementation of second-level bargaining, trade unions
might also be able to foster a collaborative environment and create
preconditions for work practices that could improve motivation, job
quality and productivity (Huselid, 1995). In light of this qualitative
evidence, our fourth and final hypothesis is that:
8
Content and types of second-level agreements vary widely across countries,
sectors and firms (see Kleinknecht, 2020, for a discussion of this issue).
93
Structural Change and Economic Dynamics 66 (2023) 89–105
HP4. Second-level agreements have a positive effect on the adoption
of new digital technologies.
3. Data and methodology
3.1. Context: digitalization in the Italian economy
The secondary data available on the diffusion of digital technologies
among Italian firms show a scattered adoption of new enabling tech­
nologies. According to the Digital Economy and Society Index (DESI),
which summarizes a set of indicators on Europe’s digital performance,
Italy is placed at the bottom of the ranking in terms digital technologies
use (European Commission, 2018). This pattern is generally ascribed to
well-known structural features of the Italian production system, above
all the large share of small and micro firms, and the share of value added
coming from traditional sectors (Bugamelli et al., 2012). A recent report
by the Italian Institute of Statistics (2018) highlighted the difficulty
experienced by Italian companies in positioning themselves at the
technological frontier and in exploiting the ongoing digital trans­
formation through investments in technologies capable of reviving
productivity dynamics. Among the factors hampering diffusion, there
are stagnant macroeconomic growth dynamics, strong territorial
dualism, the preeminent weight of small and medium-sized enterprises
on national production and a low average propensity to innovate, with
negative outcomes for both productivity and employment (Codogno,
2009; Calligaris et al., 2016; ISTAT, 2017).
The data provided by the survey on the use of ICTs also run by the
Italian Statistical Office (ISTAT) contain interesting contextual infor­
mation on the state-of-the-art of digitization in the country. ISTAT
(2018) reports a significant increase in the number of production units
that have introduced the use of ITC technologies to support business
data sharing (ERP) in various sectors (approximately 36.5% in 2017,
compared to 21.5% in 2012), with particular emphasis on the automo­
tive and telecommunications sectors. Against this backdrop, more
detailed microeconomic analyses are much needed to acquire deeper
understanding of the dynamics at play.
3.2. Data
Our empirical analysis is based on an original database drawn from
the ‘Rilevazione Imprese e Lavoro’ (RIL) survey conducted by INAPP in
2015 and 2018 on a representative sample of companies (including both
listed, non-listed companies and limited liability firms). Each wave of
the survey covers over 30,000 firms operating in non-agricultural pri­
vate sectors. A sub-sample of the firms included in the survey (around
45%) are followed over time, making the RIL dataset a partial panel over
the period under investigation.9
The RIL-INAPP survey collects a rich set of information about the
composition of the workforce, including the amount of investments in
training, hiring and separations, the use of flexible contractual ar­
rangements, the asset of the industrial relations and other workplace
characteristics. Moreover, the data contains an extensive set of firm level
controls, including management and corporate governance character­
istics, productive specialization and other variables proxying firms’
strategies (such as propensity to introduce product and process in­
novations and share of export on value added).
The fifth wave of the RIL-INAPP survey collected information on the
introduction of Industry 4.0 technologies – hereafter I4.0 technologies.
A specific question was added on investments in new technologies over
the period 2015–2017: “In the period 2015–2017 did the firm invest in
9
The RIL Survey sample is stratified by size, sector, geographical area and the
legal form of firms. Inclusion depends on firm size, measured by the total
number of employees. For more details on RIL questionnaire, sample design and
methodological issues see: http://www.inapp.org/it/ril.
V. Cirillo et al. Structural Change and Economic Dynamics 66 (2023) 89–105

Table 2
Percentage of firms investing in I4.0 technologies by sector.
At least one IoT Robotics Big Data Analytics Augmented Cybersecurity
reality

Mechanical industry 57.2 12.5 14.7 7.0 3.9 46.9

Financial services 54.9 7.4 0.7 11.0 2.1 51.9
ICT 48.6 11.8 2.1 15.7 7.5 43.2
Chemical industry 45.2 9.7 17.3 7.2 4.0 36.8
Education, Healthy 43.1 11.1 3.3 7.9 1.1 37.6
Other manufacturing 42.4 7.8 7.8 4.1 1.7 36.1
Other services 41.8 9.3 2.1 6.2 4.7 37.5
Mining 40.2 7.7 2.6 3.5 1.2 36.2
Food industry 38.7 6.7 8.6 5.3 1.7 33.1
Trade 38.1 7.5 1.8 6.8 2.1 35.0
Textile industry 38.1 7.2 6.2 2.4 1.9 32.1
Transport 34.3 5.4 5.3 8.8 0.9 26.6
Constructions 33.8 2.9 0.8 2.0 1.2 31.3
Hotel and restaurants 21.0 5.5 0.7 2.5 1.6 16.2
Total 39.1 7.7 5.1 5.9 2.5 33.9

Note: sampling weights applied. Source: Authors’ elaborations on RIL 2015–2018 panel data.

Fig. 3. Education, training, temporary work by I4.0 investors.

Note: sampling weights applied. Source: Authors’ elaborations on RIL 2015–2018 panel data

these new technologies?”. The respondent was presented with the excluding observations with missing values for the key variables used in
following options: Internet of things (IoT), Robotics, Big data analytics, the analysis, the final sample is given by a panel of around 8000 firms
Augmented reality and Cybersecurity. It was possible to give multiple observed in each year considered.
answers. The timing of this survey is important: the data were collected
right after the implementation of the ‘National Enterprise Plan 4.0’, an
3.3. Descriptive evidence
incentives scheme that was specifically designed by the Italian Gov­
ernment to lower financial constraints to investment and accelerate the
Fig. 1 shows uneven patterns of adoption, with less than 40% of
diffusion of I4.0 technologies. All firms were eligible to the scheme and
companies with at least 5 employees stating that they had made at least
all of them automatically received the incentive if they invested.10 In
one investment in I4.0 technologies over the period 2015–2017
what follows we present descriptive evidence on the diffusion of tech­
(Fig. 1).11
nologies, disaggregating the data by sector, firm size and geographical
A relatively small group of firms shows combined adoption of several
location.
I4.0 technologies. Almost 30% of firms invest only in one type of
Our empirical analysis is performed on firms with at least 5 em­
ployees in order to examine only productive units with a minimum level
of organisational structure. After imposing this selection criterion and 11
This percentage falls to 26% if we consider all the 30.000 firms (i.e. all firms
with at least one employee) interviewed in 2018.

10
This means that there was no selection or self-selection into the scheme.

94
V. Cirillo et al.
Fig. 4. Share of firms signing second-level bargaining by number of I4.0 technologies.
Note: sampling weights applied. Source: Authors’ elaborations on RIL 2015–2018 panel data
technology – showing a ‘single-technology’ approach to digitalization.12
These percentages fall when we consider simultaneous investments in
more than one I4.0 technology: only 7.4% of the RIL-INAPP panel
invested in two types of technologies, 2.7% invested in three technolo­
gies, 0.5% in four technologies, 0.3% in all I4.0 technologies (IoT, Ro­
botics, Big Data Analytics, Augmented reality and Cybersecurity). All in
all, the diffusion of the new Industry 4.0 paradigm is generally limited to
a ‘single technology’ adoption approach rather than a ‘multi-technol­
ogy’ strategy based on simultaneous investments in complementary
technologies. Unsurprisingly, the adoption of I4.0 techs is associated
with firm size, highlighting the existence of well-known differences in
cost barriers between small and large and varying absorptive capacities
(Cohen and Levinthal, 1990).
The percentage of firms adopting at least one I4.0 technology in­
creases with firm size (see Fig. 2) – from 33% in small firms (5–9 em­
ployees) to 77% in large enterprises (more than 250 employees). A
‘multi-technology’ approach to I4.0 adoption is also strongly associated
with firm size: the percentage of firms introducing contemporaneously
five I4.0 technologies increases from 0.3% of micro firms (5–9 em­
ployees) to 1.2% among large business (i.e. firms with more than 250
employees).
Tables 1 and 2 show the distribution of I4.0 adopters by type of
technology, firm size and firm location (Table 1) and by sector (Table 2).
A first distinction can be made between companies that invested in ‘at
least one’ enabling technology and companies that introduced a specific
typology among those indicated, i.e., ‘IoT’, ‘Robotics’, ‘Big Data’,
‘Augmented Reality’ and ‘Cybersecurity’. Table 1 shows how the diffu­
sion of new enabling technologies is strongly influenced by the size of
the enterprises. Cybersecurity is the most frequent choice: on average
33.9% of Italian firms invested in some forms of information security,
while augmented reality and robotics concern a smaller share of Italian
companies – respectively 2.5% and 5.1%. Again, firm size plays a
prominent role. Companies located in the North East and North West
12
This percentage falls to 20% including firms with less than 5 and more than
1 employees, and to 15% if we include companies without employees.
95
Structural Change and Economic Dynamics 66 (2023) 89–105
regions, which are well-connected with international value chains,
invest more in new technologies than their counterparts located in
Central and Southern regions. Cybersecurity emerges as the most
frequently adopted new digital technology also from analyses compiled
by the Italian National Institute of Statistics (ISTAT, 2021). By relying on
the “Permanent Census on Enterprises”, ISTAT shows that in the period
2016–2018 about 27% of Italian firms with at least 10 employees
invested in cybersecurity technologies, and this percentage rises to
about 65% when we look at large firms with more than 250 employees
(ISTAT, 2021).13 Again, firm size plays a prominent role, as confirmed
by our data. Moreover, companies located in the North East and North
West regions, which are well-connected with international value chains,
invest more in new technologies than their counterparts located in
Central and Southern regions.
Table 2 illustrates the distribution of I4.0 adopters across sectors.
The sectors featuring a greater incidence of companies investing in the
new enabling technologies are chemistry (45.2%), financial services
(54.9%), information and communication (48.6%) and mechanics
(57.2%). ICT displayed a higher incidence of I4.0 adopters in IoT
(11.8%), Big Data (15.7%) and Cybersecurity (43.2%). The mechanical
and chemical sectors are instead characterised by the most pronounced
adoption of robotics.
Linking the investment in new digital technologies to the skill mix of
firms, Fig. 3 shows that on average firms that report investments in the
new technologies have a higher share of tertiary educated workers and
register a more intense use of training activities. Conversely, I4.0
adopters register on average a lower share of employees on short-term
contracts. There may be several reasons for this, including lack of in­
formation on the returns to education and training, lack of access to
finance for training, or even fear of not reaping the returns on invest­
ment in training because of the risk of poaching. The latter might be
especially relevant to highly-innovative and high-tech industries.
When it comes to industrial relations, we detect a positive
13
The census covers 2,80,000 enterprises located in Italy with at least 3
workers (for further details see https://www.istat.it/it/archivio/238337).
V. Cirillo et al. Structural Change and Economic Dynamics 66 (2023) 89–105

Table 3
Estimates of the average marginal effects. Dep var: Probability to invest in I4.0 and number of I4.0 technologies.
(1) (2) (3) (4)
At least one Number of I4.0 At least one Number of I4.0
b/se b/se b/se b/se

Share of college workers 0.177028*** 0.396379** 0.115041*** 0.266226**

Share of trained workers (0.037) (0.155) (0.035) (0.111)
0.043859*** 0.087007*** 0.060826*** 0.003022
Share of fixed-term workers (0.013) (0.026) (0.012) (0.040)
− 0.063911* 0.020456 − 0.004203 − 0.022740
Second level agreement (0.036) (0.100) (0.035) (0.104)
0.036378** 0.117391*** 0.037491*** 0.066634
(0.017) (0.041) (0.014) (0.043)
Firm size 0.070322*** 0.002281*** 0.074574*** 0.000298***
VA per worker (log) (0.005) (0.001) (0.005) (0.000)
0.009902** 0.034536*** 0.012234*** 0.028623**
Share of workers over 50 (0.005) (0.009) 0.004 (0.013)
− 0.050792 − 0.301616*** − 0.063056** − 0.333603***
Share of workers 35–50 (0.033) (0.068) (0.030) (0.095)
0.029385 − 0.036414 − 0.000807 − 0.005286
Family firm (0.029) (0.057) (0.028) (0.088)
− 0.000216 − 0.083669*** − 0.022762* − 0.126162***
Share of workers with (0.015) (0.028) (0.013) (0.041)
high school degree 0.096306*** 0.079446* 0.051784*** 0.062981
In a trade group (0.021) (0.047) (0.019) (0.063)
0.032560*** 0.076495*** 0.044883*** 0.035137
Management with (0.012) (0.025) (0.011) (0.036)
tertiary education 0.029777* 0.108422*** 0.012871 0.059479
Management with (0.018) (0.039) (0.016) (0.048)
high school degree 0.009442 0.059701* − 0.004793 0.051265
Female management (0.015) (0.035) (0.014) (0.041)
0.012188 − 0.014869 0.023233 0.002512
Product innovation (0.017) (0.033) (0.015) (0.045)
0.065874*** 0.159434*** 0.088955*** 0.106009***
Process innovation (0.013) (0.025) (0.011) (0.036)
0.081530*** 0.186082*** 0.123046*** 0.060461*
Firm age (0.013) (0.025) (0.012) (0.036)
0.000136 0.000540** 0.000233* 0.000924*
FDI (0.000) (0.000) (0.000) (0.000)
0.090194*** 0.207316*** 0.104813*** 0.287045***
Share of export on VA (0.028) (0.060) (0.023) (0.074)
0.000168 0.000536 0.000246 0.001423*
Sec. and reg. dummies (0.000) (0.000) (0.000) (0.001)
Yes Yes Yes Yes

Observations 7746 7746 7675 7675

Non zero obs. 3719 3413 3.413
Censored obs
Uncensored obs 996.03 714.49 4262 4262
Wald Chi2 1479.55 375.60
Prob > Chi2 0.0000 0.0000 0.0004 0.0000
Pseudo R2 0.1051
Sample sel. stat.: 1,7084*** − 0.4169
athrho
LR test (rho = 0): 0.4801 0.0535
12.66 60.66
chi2(1) = 0.0000 0.0000
Prob > Chi2 0.0004 0.0000

1 number of employees in columns (2) and (4), log of number of employees in (1) and (2).
Note: marginal effects (1); Zero-Inflated Poisson (2); Heckprobit selection model (3); Heckman selection model (4). Omitted variables: managers with lower secondary
and primary education, workers with lower secondary and primary education; workers less than 35 years old. First stage exclusion restrictions "financially weak" (3, 4):
“During 2014 did the company apply for a bank credit for cash or liquidity reasons?”.
***
p<0.01,.
**
p<0.05,.
*
p<0.1.
Source: Authors’ elaborations on RIL 2015–2018 panel data.

96
V. Cirillo et al. Structural Change and Economic Dynamics 66 (2023) 89–105

Table 4 Table A1
Estimates of the average marginal effects by firm size and sector of activity. Dep Descriptive statistics.
var: Probability to invest in I4.0 and number of I4.0 technologies. Mean Sd Min Max
(1) (2) (3) (4)
At least one 0.39 0.4879759 0 1
At least one At least one At least one At least one
Number of I4.0 tech 0.5511074 0.835768 0 5
< 250a > 250 Manuf. Serv.
IoT 0.0773866 0.2672184 0 1
b/se b/se b/se b/se
Robotics 0.0506843 0.2193641 0 1
Share of college 0.175490*** 0.254780** 0.271261*** 0.157283*** Augmented Reality 0.0254782 0.1575808 0 1
workers Big Data Analytics 0.0588266 0.2353126 0 1
Share of trained (0.039) (0.120) (0.082) (0.046) Cybersecurity 0.3387317 0.4733041 0 1
workers 0.045031*** 0.024989 0.037894* 0.038673* Share of college workers 0.0950232 0.185736 0 1
Share of fixed- (0.014) (0.050) (0.020) (0.021) Share of trained workers 0.3446457 0.4181189 0 1
term workers − 0.058052 − 0.180278* − 0.013164 − 0.036111 Share of fixed-term workers 0.1062658 0.1998845 0 1
Second level (0.038) (0.108) (0.064) (0.049) Second level agreement 0.0615791 0.2404027 0 1
agreement 0.044560** − 0.091568** 0.048062** − 0.008001 Firm size 28.83787 184.4305 5 10,852
Firm size (0.019) (0.042) (0.024) (0.029) VA per worker (log) 11.70945 1.185182 0.089 16.106
0.065919*** 0.112861*** 0.087764*** 0.061900*** Share of workers over 50 0.2210545 0.2198158 0 1
VA per worker (0.007) (0.022) (0.009) (0.008) Share of workers 35–50 0.4611166 0.2590163 0 1
(log) 0.008292* 0.016044 0.009562 0.008513 Family firm 0.9073621 0.2899402 0 1
Share of (0.005) (0.011) (0.007) (0.007) Share of workers with high school 0.497609 0.3186729 0 1
workers over − 0.054325 0.036595 0.011375 − 0.078847 degree
50 In a trade group 0.5717729 0.4948486 0 1
Share of (0.034) (0.128) (0.049) (0.051) Management with tertiary 0.2322171 0.4222696 0 1
workers 0.031214 − 0.042711 0.043077 0.018206 education
35–50 Management with high school 0.5614778 0.496233 0 1
Family firm (0.030) (0.118) (0.045) (0.043) degree
0.000018 − 0.012948 0.044743** − 0.053089** Female management 0.1612228 0.3677563 0 1
Share of (0.016) (0.034) (0.022) (0.022) Product innovation 0.3594212 0.4798568 0 1
workers with 0.098773*** 0.042262 0.059836* 0.120764*** Process innovation 0.2855514 0.4517011 0 1
high school Firm age 25.7691 21.09899 0 1009
degree FDI 0.0172501 0.130209 0 1
In a trade group (0.022) (0.086) (0.032) (0.033) Share of export on VA 7.191898 19.23426 0 100
0.030456** 0.058112 0.041175** 0.031277* Financially weak 0.2744067 0.4462397 0 1
Management (0.013) (0.045) (0.018) (0.018)
Note: sampling weights applied.
with tertiary 0.032018* − 0.024698 0.034329 0.024055
education Source: Authors’ elaborations on RIL 2015–2018 panel data.
Management (0.018) (0.075) (0.025) (0.030)
with high 0.009351 0.005985 0.031547 − 0.007562 businesses and record a relatively low incidence of second-level
school degree
bargaining.14
Female (0.015) (0.073) (0.021) (0.027)
management 0.012480 0.037783 − 0.005873 0.030459 Having sketched the broad patterns of diffusion, we now move on to
Product (0.018) (0.067) (0.026) (0.025) investigate the determinants of firm technology choices in a multivariate
innovation 0.068405*** − 0.003449 0.038097** 0.100257*** setting.
Process (0.014) (0.044) (0.019) (0.020)
innovation 0.085311*** 0.038322 0.101617*** 0.034341
Firm age (0.014) (0.047) (0.018) (0.022)
3.4. Empirical strategy
0.000138 0.000315 − 0.000016 0.000364
FDI (0.000) (0.000) (0.000) (0.000)
0.079708** 0.066113 0.051836 0.103243* The central research questions of this paper focus on the role of skills,
Share of export (0.033) (0.044) (0.036) (0.053) training and the organisation of work as determinants of technology
on VA 0.000265 − 0.001320* − 0.000137 0.000603
adoption. We estimate the following equation:
Sec. and reg. (0.000) (0.001) (0.000) (0.001)
dummies Yes Yes Yes Yes Yi,t = α + β1 Ei,t− 1 + β2 Ti,t− 1 + β3 FTi,t− 1 + β4 SBi,t− 1 + β5 Xi,t− 1 + ui,t t
Observations 7206 536 3533 3233 = [2015, 2018] (1)
Wald Chi2 773.15 105.02 519.69 345.66
Prob > Chi2 0.0000 0.0000 0.0000 0.0000 where the dependent variable of Eq. (1) (Yi,t ) represents, alternatively:
Pseudo R2 0.0851 0.1836 0.1219 0.0852
(i) a dichotomous indicator (I4.0) taking value 1 if the firm i has invested
Note: omitted variables: managers with lower secondary and primary education, in at least one I4.0 technology over the period 2015–2017, and
workers with lower secondary and primary education; workers less than 35 0 otherwise; (ii) a categorical indicator (Number I4.0) assuming discrete
years old. values from 0 to 5 according to the total number of I4.0 technologies
***
p<0.01. introduced. As for our key explanatory variables, Ei, Ti, FTi and SBi
**
p<0.05,.
* indicate, respectively, the share of workers with college education, the
p<0.1.
share of trained workers, the share of fixed-term workers, that is a proxy
Source: Authors’ elaborations on RIL 2015–2018 panel data.
a
Firms included are those having at least 5 employees and less than 250 for flexible within-firm work arrangements (measured in 2015), and the
employees. adoption of second-level bargaining. Analogously, vector Xi includes a
set of lagged controls for management and corporate governance,
workforce composition, firms’ productive and competitive characteris­
tics as well as industrial relations (see Table A1 in appendix for full
association between second-level agreements and the number of new descriptive statistics of the control variables), while the parameter ui,t
digital technologies introduced (see Fig. 4). On average, firms recurring
to decentralized bargaining show a higher incidence of new technology
adoption with respect to those relying on other levels of bargaining. 14
This is in line with the suggestion that larger firms could face more resis­
Leading multiple-technology adopters – those reporting simultaneous tance by unions due to concerns that the new technologies may exacerbate the
investments in all types of digital technologies – tend to be large risk of control over workers (Moro et al., 2019).

97
V. Cirillo et al. Structural Change and Economic Dynamics 66 (2023) 89–105

Table A2 suffer from potential omitted variable bias and reverse causality.15 The
Test of exclusion restriction. inclusion of a broad set of controls allows us to minimize the endoge­
(1) (2) neity bias arising from the presence of omitted variables. Moreover,
Investment I4.0 Number of I4.0 including these variables as pre-determined controls helps to address
b/se b/se reverse causality concerns.16
Share of college workers 0.182506*** 0.297719*** We also implement a two stage Heckman procedure (Amemiya 1985;
Share of trained workers (0.037) (0.074) Heckman 1979) conditioning the adoption choice on the likelihood that
0.042909*** 0.089882*** firms were investment-active. In our framework this is equivalent to
Share of fixed-term workers (0.013) (0.025)
− 0.063130* − 0.010188
performing a binary or count response model with sample selection
Second level agreement (0.037) (0.062) (Wooldridge 2010), as follows:
0.037520** 0.162264*** ( )
Firm size (0.017) (0.034) Pr Ii,t− 1 = α + β1 Ei,t− 1 + β2 Ti,t− 1 + β3 FTi,t− 1 + β4 SBi,t− 1 + β5 Xi,t− 1
0.070131*** 0.000369*** + γZi,t− 1 + ui,t (2)
VA per worker (log) (0.005) (0.000)
0.009296** 0.031605***
Share of workers over 50 (0.005) (0.009) Yi,t∗ = α + β1 Ei,t− 1 + β2 Ti,t− 1 + β3 FTi,t− 1 + β4 SBi,t− 1 + β5 Xi,t− 1 + λi + εi,t
− 0.050115 − 0.257149*** (3)
Share of workers 35–50 (0.033) (0.057)
0.031327 − 0.028903 The dependent variable Pr(Ii,t-1) in the selection Eq. (2), is a proba­
Family firm (0.029) (0.052) bility index assuming value 1 if firm i made investments in 2015 and
0.000794 − 0.128519*** 0 otherwise. As for the explanatory variables, vector X includes the
Share of workers with high school degree (0.015) (0.031)
0.096769*** 0.088260**
entire set of controls already considered in Eq. (1). We use as exclusion
In a trade group (0.021) (0.038) restriction a variable indicating the firm’s demand for bank loans due to
0.033435*** 0.069015*** cash or liquidity problems11. The dependent variable Y*i,t in Eq. (3),
Management with tertiary education (0.012) (0.022) represents either the dummy indicator for any I4.0 technology, or the
0.030788* 0.103339***
number of I4.0 technologies (Number I4.0). This is observed mainly if Pr
Management with high school degree (0.018) (0.032)
0.009667 0.051493** (It-1) is equal to 1, i.e. if firm i realised an investment in 2015. Accord­
Female management (0.015) (0.026) ingly, the right-hand side variables are the same set of controls for
0.012318 − 0.018181 managers, firms and workforce characteristics use in Eq. (1), while λi is
Product innovation (0.017) (0.030) the Inverse Mills Ratio (IMR) accounting for self-selection into the in­
0.066726*** 0.162801***
Process innovation (0.013) (0.025)
vestment decision12. The Probit equation for the probability of firm in­
0.081139*** 0.207712*** vestment in 2015 is therefore completely observed on data, while the
Firm age (0.013) (0.026) selected sample is available for analysing the impact of human capital
0.000135 0.000732** mix on I4.0 technology adoption. Eqs. (2) and (3) are estimated simul­
FDI (0.000) (0.000)
taneously by Maximum Likelihood. This procedure allows us to correct
0.089610*** 0.407903***
Share of export on VA (0.028) (0.067) for sample selection bias and to obtain consistent estimates of average
0.000173 0.001701*** marginal effects. Auxiliary information and the main statistical tests for
Financially weak (0.000) (0.001) the sample selection hypothesis are reported in the last rows of Table 3
− 0.005122 0.003832 and 4, while results from estimation of Eq. (2) are reported in Table A2
Constant (0.012) (0.022)
− 0.182672
of Appendix.
(0.159)
Observations 7707 7707 4. Results
Wald Chi2 991.71 24.05
F(52, 7654) 0.0000
Prob > Chi2 0.0000 Table 3 contains the main results of our econometric analysis. First of
Prob > F 0.0000 all, this concerns the relationship between skills and i) the probability of
Pseudo R2 0.1052 0.1737 adoption (first column) and ii) the intensity of adoption measured by the
R2
number of technologies (second column). We find that firms charac­
Root MSE 0.88051
terized by a higher share of educated workforce invest more in new
Note: marginal effects (1); Zero-Inflated Poisson (2). Omitted variables: man­ technologies and are more likely to display a multi-technology adoption
agers with lower secondary and primary education, workers with lower sec­ strategy. Ten percentage points increase in the share of tertiary educated
ondary and primary education; workers less than 35 years old. workers are associated with a raise of 1.8% in the probability of intro­
***
p<0.01,.
** ducing at least one I4.0 technology and 3.9% increase in the number of
p<0.05,.
* technologies introduced. Similarly, a higher proportion of trained
p<0.1.
Source: Authors’ elaborations on RIL 2015–2018 panel data. workers also appears to favour both the probability of investment and
the number of digital technologies adopted - a ten percentage points
increase in the share of trained workers is correlated with 0.4% change
indicates an idiosyncratic error term.
in the probability of I4.0 and 0.9% increase in the number of digital
Non-linear regression models are used to estimate different specifi­
cations of Eq. (1). We run a Probit and a Zero Inflated Poisson model to
estimate, respectively, the average marginal effects associated to the 15
This happens, for example, when implicit social norms at workplace and
probability of introducing at least one technology and the total number
managers’ personal traits, typically not observed by the researcher, affect both
of new digital technologies (Wooldridge, 2010; Cameron and Trivedi, the quality of human resource practices (low workers turnover, high share of
2013). Potential issues concerning unobserved heterogeneity and sam­ skilled and trained workers, and so on) as well as firms’ innovative and pro­
ple selection (endogeneity) may arise in this set-up. Namely, if there are ductive behaviour. In this case, a positive non-linear estimate in Eq. (1) may
both observable and unobservable factors simultaneously affecting reflect firms and managers’ unobserved characteristics rather than the impact
workforce human capital endowment and the propensity to invest in of human capital on the adoption of I4.0 technologies.
16
new technologies, the Probit and Zero Inflated Poisson estimates might In particular, we refer to variables related to corporate governance, de­
mographic profile of managers, recruitment policies and industrial relations.

98
V. Cirillo et al. Structural Change and Economic Dynamics 66 (2023) 89–105

Table A3
Robustness check: alternative measures for training.
(1) (2) (3) (4)
b/se b/se b/se b/se

Share of college workers 0.177591*** 0.382831** 0.174657*** 0.449092***

(0.037) (0.157) (0.041) (0.174)
Cost of training entirely borne by the company 0.033392*** 0.035251*
(0.011) (0.021)
Log cost of training per employee 0.010313*** 0.022758***
(0.002) (0.005)
Share of fixed-term workers − 0.067809* 0.017638 − 0.060195 0.051357
(0.037) (0.094) (0.039) (0.098)
Second level agreement 0.039705** 0.118171*** 0.038563** 0.109746**
(0.017) (0.038) (0.018) (0.043)
Firm size 0.071687*** 0.002316*** 0.065056*** 0.001872***
(0.005) (0.001) (0.006) (0.001)
VA per worker (log) 0.010046** 0.032698*** 0.008049 0.028552***
(0.005) (0.010) (0.005) (0.010)
Share of workers over 50 − 0.049340 − 0.301959*** − 0.044252 − 0.278547***
(0.033) (0.067) (0.035) (0.076)
Share of workers 35–55 0.029032 − 0.033104 0.035668 − 0.016383
(0.029) (0.057) (0.031) (0.062)
Family firm − 0.000831 − 0.080314*** 0.001509 − 0.080648***
(0.015) (0.028) (0.016) (0.031)
Share of workers with high school degree 0.097336*** 0.081078* 0.097144*** 0.068179
(0.021) (0.047) (0.022) (0.050)
In a trade group 0.034696*** 0.080319*** 0.036328*** 0.088475***
(0.012) (0.025) (0.013) (0.027)
Management with tertiary education 0.032218* 0.111312*** 0.025698 0.102637**
(0.018) (0.038) (0.019) (0.041)
Management with high school degree 0.011090 0.061231* 0.007745 0.057735
(0.015) (0.034) (0.016) (0.037)
Female management 0.014156 − 0.011896 0.011474 − 0.007646
(0.017) (0.033) (0.018) (0.036)
Product innovation 0.067437*** 0.163005*** 0.061172*** 0.143279***
(0.013) (0.025) (0.014) (0.027)
Process innovation 0.082570*** 0.188848*** 0.075333*** 0.182318***
(0.013) (0.025) (0.014) (0.027)
Firm age 0.000144 0.000563** 0.000171 0.000506**
(0.000) (0.000) (0.000) (0.000)
FDI 0.092977*** 0.202763*** 0.083316*** 0.219513**
(0.028) (0.050) (0.030) (0.094)
Share of export on VA 0.000157 0.000501 0.000401 0.000898**
(0.000) (0.000) (0.000) (0.000)
Number of employees 0.002330*** 0.001899***
(0.001) (0.001)

Observations 7746 7746 6774 6774

Non zero obs. 3719 3225
Wald Chi2 992.61 708.19 905.26 663.91
Prob > Chi2 0.0000 0.0000 0.0000 0.0000
Pseudo R2 0.1050 0.1091

technologies. Conversely, the share of fixed-term workers is negatively
associated to the adoption choice, even though this result is statistically
weaker, but is not correlated with the adoption of multiple technologies.
More in detail, a ten percentage points increase in fixed-term employees
decreases the probability of I4.0 by 0.6%. Moreover, second-level
agreements seem to favour adoption and exert a positive effect on
both the adoption of technologies (by 3.6%) and the number of tech­
nologies (by 11%).
When we control for selection bias (columns 3 and 4), the share of
fixed-term workers and second-level agreements (for the number of
technologies) are no longer significant, but both skills and training
maintain a positive and significant estimated correlations – even though
lower in magnitude - on the probability to invest in digital technologies.
Specifically, ten points increase in the share of tertiary educated workers
leads to 1.1% raise of the probability of introducing I4.0 technologies
and 2.6% raise of the probability of number of digital technologies.
Similarly, a higher share of trained workers increases the probability of
introducing I4.0 by 0.6%. Considering the potential selection issue, we
also confirm the positive association between the presence of second-
level bargaining and our measures of digitalization, i.e. 4% raise in
the probability of adoption and 6.6% increase for the number of new
technologies. This means that controlling for firm propensity to invest,
these enabling technologies remain strongly associated with skills and
training as well as to “cooperative” industrial relations at the workplace
level.17 As we mentioned in the discussion of the descriptive results
(section 2.2), the probability of introducing new digital technologies
and the adoption of a multi-technology strategy are strongly and posi­
tively correlated with a wide set of control variables. These provide very
useful insights into complementary (firm) characteristics that may
trigger investment in new enabling technologies. The results suggest
that larger firms, led by higher quality management in terms of educa­
tional level, higher productivity levels, more innovative (both in terms
of process and product innovation), and more internationalised, present
17
Table A3 in the Appendix shows a robustness check performed by replacing
the variable ‘share of trained workers’ with a continuous variable proxying the
average cost in training per employee and alternatively a dichotomous variable
taking value of one if the cost of training is fully borne by the company. The
magnitude of coefficients is slightly lower compared to OLS in Table 3, but still
significant and positive.

99
V. Cirillo et al. Structural Change and Economic Dynamics 66 (2023) 89–105

Table A4
Robustness check: inclusion of part-time for work organizational issues.
(1) (2) (3) (4)
b/se b/se b/se b/se

Share of college workers 0.176743*** 0.335029 0.175876*** 0.394366**

(0.037) (0.211) (0.037) (0.153)
Share of trained workers 0.044355*** 0.084889*** 0.043785*** 0.086722***
(0.013) (0.026) (0.013) (0.026)
Part time for work organization ¡0.011698 ¡0.037482 ¡0.011253 ¡0.039943
(0.015) (0.031) (0.015) (0.031)
Share of fixed-term workers ¡0.063452* 0.024923
(0.036) (0.099)
Second level agreement 0.037519** 0.116699** 0.036348** 0.117530***
(0.017) (0.047) (0.017) (0.041)
Firm size 0.069584*** 0.002455*** 0.070488*** 0.002269***
(0.005) (0.001) (0.005) (0.001)
VA per worker (log) 0.010045** 0.031856*** 0.009694** 0.031970***
(0.005) (0.010) (0.005) (0.010)
Share of workers over 50 − 0.041883 − 0.305846*** − 0.050584 − 0.299574***
(0.032) (0.068) (0.033) (0.068)
Share of workers 35–50 0.038186 − 0.038437 0.029231 − 0.036644
(0.028) (0.057) (0.029) (0.057)
Family firm − 0.000854 − 0.079207*** − 0.000001 − 0.083402***
(0.015) (0.029) (0.015) (0.028)
Share of workers with high school degree 0.097145*** 0.083543 0.095827*** 0.077018
(0.021) (0.055) (0.021) (0.047)
In a trade group 0.032799*** 0.074713*** 0.032598*** 0.076504***
(0.012) (0.026) (0.012) (0.025)
Management with tertiary education 0.030022* 0.107059*** 0.029831* 0.109131***
(0.018) (0.039) (0.018) (0.039)
Management with high school degree 0.009236 0.060184* 0.009560 0.060269*
(0.015) (0.036) (0.015) (0.035)
Female management 0.011439 − 0.015882 0.012198 − 0.014812
(0.017) (0.033) (0.017) (0.033)
Product innovation 0.066006*** 0.157441*** 0.065852*** 0.159106***
(0.013) (0.025) (0.013) (0.025)
Process innovation 0.081439*** 0.188607*** 0.081506*** 0.186201***
(0.013) (0.025) (0.013) (0.025)
Firm age 0.000143 0.000538** 0.000132 0.000532**
(0.000) (0.000) (0.000) (0.000)
FDI 0.089627*** 0.212873*** 0.089791*** 0.207190***
(0.028) (0.075) (0.028) (0.060)
Share of export on VA 0.000153 0.000575 0.000163 0.000521
(0.000) (0.000) (0.000) (0.000)
Observations 7746 7746 7746 7746
Non zero obs. 3719 3225
Wald Chi2 994.72 709.34 997.06 715.58
Prob > Chi2 0.0000 0.0000 0.0000 0.0000
Pseudo R2 0.1049 0.1052

100
V. Cirillo et al.
a higher probability to introduce digital technologies as well as to follow
an adoption pattern characterized by investment in multiple I4.0 tech­
nologies. Conversely, a higher share of older workers and family-
ownership are strongly and negatively correlated with the adoption of
I4.0 technologies and also with ‘multi-technology’ strategies.
As for hypothesis 2, investment in training seem to favour technology
adoption, validating the argument about the importance of tacit
knowledge and the development of firm-specific capabilities that will
enable the extraction of productivity gains from the new investments.
Interestingly, however, the complementarity effect between skills and
digital technologies is stronger for skills generated through the educa­
tion system than through on-the-job training. Results from Table 3
provide useful insights on the relation between firm-level work orga­
nization and the propensity to invest in new technologies. As discussed
in Section 2, adoption goes hand in hand with organizational change.
The use of ICTs has already shown patterns of complementarity with
specific forms of work organisation involving decentralised decision-
making and team working (Bresnahan et al., 2002). We find this effect
also here, where our second hypothesis on the role of flexible staff ar­
rangements is confirmed.18
Our results also indicate that the introduction of I4.0 technologies is
facilitated by the accumulation of knowledge through longer-term work
relationships rather than by the expectation of efficiency gains derived
from the use of short-term contracts (in line with Kleinknecht, 2020).
Results presented in column 1 of Table 3 show that firms with a higher
share of temporary jobs are on average less digitized than those char­
acterised by a higher share of permanent jobs. Finally, with respect to
our final hypothesis, the role of second-level bargaining is also
confirmed and follows our expectations. The underlying mechanism is
likely to be that more collective decision-making process, shared across
the firm’s hierarchical structure, favour riskier investment in new
technology. Note as well that conditioning on the probability of prior
investment, that is to say underplaying the role of first technology
adopters relative to persistent investors, the statistical significance of
flexibility and second-level bargaining disappears.19
In Table 4 we show the results of our econometric estimation on the
probability of adopting at least one I4.0 technology, by disaggregating
firms into size classes, i.e. firms with less than 250 employees vs. firms
with more than 250 employees, and the broad economic sector in which
they operate, i.e. manufacturing and services.20 Given the attention paid
to the role of firm size in the diffusion literature (see Section 2), it is
important to explore similarities and differences in behaviour across size
18
Table A4 displays results obtained using as work organizational variable the
main reason of applying part-time contracts. In detail, we create a dummy
variable taking value of 1 if the company positively replies to the following
option: ‘part-time better suits the company’s type of production and work
organisation’, and 0 otherwise. We did not find a statistically significant rela­
tionship for work organizational part-time, although the share of fixed-term
employees remains significant and negative in the OLS equation.
19
As a robustness check, Table A5 in the Appendix shows the probabilities
associated to the introduction of I4.0 technologies defined as internet of things,
robotics, big data analytics, augmented reality and therefore excluding cyber­
security. We still detect a significant and positive relationship between share of
college and trained workers and adoption of I4.0 technologies (not including
cybersecurity). The implementation of Heckman correction weakens the sig­
nificance of estimates except for share of trained workers which remains
strongly significant and positively associated to the adoption of I4.0. Overall
cybersecurity is an intrinsic component of internet-based market transaction
and is susceptible to a broader pool of adopters that also include the large
number of service businesses – small and large – that compose the Italian
economy across regions. More so than robots. This is corroborated by evidence
about the geographical spread of this technology, which is well-represented in
all Italian macro-regions precisely because of its broader, not narrower,
‘enabling’ potential (Cirillo et al., 2022a).
20
In the Appendix we provide a further exercise splitting the sample in
manufacturing and construction versus services (see Table A6).
101
Structural Change and Economic Dynamics 66 (2023) 89–105
classes. Consistently with the results presented Table 3, college-
graduates and trained workers have a positive and statistically signifi­
cant effect on the adoption of I4.0 technologies for both SMEs and large
firms, and for firms operating in manufacturing and service sectors.
Interestingly, the share of trained workers does not affect the probability
of adoption for large firms, and the effect of second-level agreements is
positive for SMEs but negative for larger firms. Decentralised bargaining
seems to favour technology adoption in small and medium-sized orga­
nisations, and not in larger firms typically more reliant on sector-level
bargaining. This may indicate that in large businesses, second-level
bargaining might hamper the diffusion of I4.0 technology possibly
because of concerns among the labour force of increased control by
managers through technological surveillance. A more corporative atti­
tude may prevail in small and medium-size firms, either fostering better
information exchanges about the technology within the company or
favouring a generally more cooperative context for shared technology
adoption decisions.
All in all, these findings suggest that there is significant heteroge­
neity in the population of adopters, but results are very similar between
the manufacturing and service sectors, indicating that the new tech­
nologies affect very different economic activities and have the potential
to permeate not only manufacturing (the production model more closely
associated with the ‘smart factory’) but also services. Between the two
macro-areas, the variable that is significant for manufacturing but not
for services is the role of second-level bargaining. This might signal
different patterns of governance for technology adoption decisions be­
tween manufacturing and services, which may also be associated with
heterogeneous performance and employment effects post-adoption (see
Cirillo et al., 2022b on recent qualitative evidence concerning automa­
tion technologies in services).
5. Conclusions
What firm characteristics favour the adoption of new production
technologies? This is a fundamental question if we are on the eve of a
Fourth Industrial Revolution and if the new wave of digital technologies
is the backbone of the hyper-connected company of the future, charac­
terized by strong interaction between new production technologies
(smart production) and information and network infrastructures (smart
services). While the average firm is still very far from this archetypal
model of production – and least in the Italian context – the process of
diffusion of new enabling technologies is on its way and it is already
possible to identify some defining characteristics of adopters, even in a
context that is lagging behind in terms of digitalisation relative to
comparable economies.
In this contribution we have exploited a large and unique dataset that
includes fine-grained information about the technology adoption
choices made by firms. The vast majority of adopters opt for a single-
technology, rather than an integrated (multiple-technology) approach.
The econometric evidence confirms a line of continuity with previous
studies of ICTs, with strong complementarities between skills and new
technology. Both human capital measured by education attainment
levels and on-the-job training are positively associated with the adop­
tion of digital technologies. Comparatively weaker evidence points to
the role of flexible work. Regarding this variable, some of the estima­
tions indicate a negative, rather than positive, effect, pointing to the
importance of knowledge accumulation embodied in firm employees
rather than the efficiency gains of labour market flexibility. Decentral­
ised bargaining instead appears to favour new technology adoption,
albeit with strongly heterogeneous effects. The key implication for firm
strategy is that workers’ skills are primary determinants of the adoption
of digital enabling technologies, arguably because they are necessary
conditions for the extraction of productivity gains from the new assets.
The corresponding policy lesson is that industrial policies that incenti­
vise digitization cannot only focus on the acquisition of assets but must
include strong components of upskilling and training, as well as
V. Cirillo et al. Structural Change and Economic Dynamics 66 (2023) 89–105

Table A5
Robustness check: alternative measure for I4.0 (excluding cybersecurity).
(1) (2) (3) (4)
At least one Number of I4.0 At least one Number of I4.0
b/se b/se b/se b/se

Share of college workers 0.071294** 0.089549* 0.031022 0.059362

(0.030) (0.049) (0.030) (0.051)
Share of trained workers 0.021218* 0.036154* 0.033721*** 0.008017
(0.011) (0.019) (0.011) (0.023)
Share of fixed-term workers ¡0.005948 ¡0.021650 0.012577 0.010702
(0.032) (0.055) (0.032) (0.056)
Second level agreement ¡0.000845 ¡0.016031 0.002944 0.013452
(0.013) (0.022) (0.014) (0.023)
Firm size 0.062436*** 0.001896*** 0.062393*** 0.000131***
(0.004) (0.000) (0.008) (0.000)
VA per worker (log) 0.013947*** 0.025616*** 0.014835*** 0.016289**
(0.004) (0.008) (0.004) (0.006)
Share of workers over 50 − 0.144781*** − 0.262581*** − 0.130679*** − 0.200965***
(0.029) (0.053) (0.040) (0.049)
Share of workers 35–50 − 0.041097* − 0.056013 − 0.037037 − 0.052279
(0.024) (0.043) (0.026) (0.043)
Family firm 0.000633 − 0.025490 − 0.014436 − 0.038484*
(0.012) (0.018) (0.011) (0.020)
Share of workers with high school degree 0.019363 0.018184 0.015643 0.008465
(0.018) (0.034) (0.018) (0.031)
In a trade group 0.016426 0.031029 0.027333*** 0.022164
(0.010) (0.019) (0.010) (0.020)
Management with tertiary education 0.011841 0.044168* 0.005996 0.012941
(0.015) (0.026) (0.014) (0.025)
Management with high school degree 0.007034 0.036393 0.008842 0.022084
(0.013) (0.024) (0.013) (0.022)
Female management 0.016933 − 0.001594 0.022128 0.021602
(0.014) (0.024) (0.014) (0.024)
Product innovation 0.052456*** 0.091830*** 0.066839*** 0.046937**
(0.011) (0.019) (0.010) (0.023)
Process innovation 0.077195*** 0.117249*** 0.074435*** 0.021422
(0.011) (0.019) (0.012) (0.030)
Firm age 0.000106 0.000248 0.000211* 0.000384*
(0.000) (0.000) (0.000) (0.000)
FDI 0.060700*** 0.102566*** 0.050175*** 0.058433**
(0.019) (0.035) (0.017) (0.030)
Share of export on VA 0.000190 0.000208 0.000217 0.000546*
(0.000) (0.000) (0.000) (0.000)
Sec. and reg. dummies Yes Yes Yes Yes
Observations 7746 7746 7675 7675
Non zero obs. 1755
Wald Chi2 1002.5 213.2 732.89 156.53
Prob > Chi2 0.0000 0.0000 0.0000 0.0000
Pseudo R2 0.1417
athrho 0.83 − 2.38
chi2(1) = 0.69 5.68
Prob > Chi2 0.4077 0.0171

appropriate policies for the supply of new skills through the institutional
formation of digital competences.
Far from being a policy evaluation design shedding light on the
effectiveness of the ‘National Enterprise Plan 4.0’, the evidence we
provide in this paper shows indirectly to what extent and under what
conditions the policy incentives hit the right targets. All in all, the evi­
dence shows that among the factors favouring digital technology
adoption, human capital and on-the-job training exert systematic posi­
tive effects. However, new microeconomic evidence on adoption be­
haviours is essential to shape strategy and policy decisions. This paper
contributes to filling an important gap in the literature on the emergent
Fourth Industrial Revolution, but of course many important questions
remain unanswered. For instance, it will be fundamental to identify the
consequences of digitization on employment and wages, as the literature
has begun to do with a sharp, but perhaps too limited, focus on robots
(Domini et al., 2021; Acemoglu et al., 2020). Given that the ongoing
process of digitization includes a broad group of technologies and a
multiplicity of devices and techniques (as stressed by Balsmeier and
Woerter, 2019; Mina and Martinelli et al., 2021), it is possible that
different technological combinations will generate different effects on
productivity and employment, and these should be investigated in a
variety of contexts of application. Further, it would be extremely
important to evaluate whether and how the implementation of new
models of production changes not only the internal but also the external
organisation of the firm, and the related local vs. global development of
value chains. Finally, one should investigate how and to which extent
macroeconomic conditions and heterogeneous demand can shape in­
vestment plans and mostly digitalization strategies. So far, the majority
of Italian firms tends to adopt one technology, rather than many, it is
plausible that instances of multiple technology adoption would be much
more complex to handle, and overall riskier and more costly. It is
therefore possible that firms opt for a gradual process of transformation,
quite independently from financial constraints hampering adoption
decisions. From this point of view, the techno-organizational capabil­
ities of firms and the type of strategic orientation versus technological
adoption both affect drivers and barriers to adoption (Cirillo et al.,
2022b). New qualitative, behavioural evidence could be very useful to
gain a deeper and better understand of the economic mechanism at play
in the technological upgrading strategies of firms. This is even more
crucial in the current phase of great uncertainty since the outbreak of the

102
V. Cirillo et al. Structural Change and Economic Dynamics 66 (2023) 89–105

Table A6 Robotics and enabling digital Technologies & Systems 4.0, Centro di
Robustness check: alternative grouping (manufacturing and construction). Competenza ai sensi dell’art. 1, c. 115, L. 11/12/2016, n. 232 e del DD di
At least one Concessione della DGPICPMI Prot. 09/2019 del 29/4/2019, CUP:
Manuf. + Construction B81J18000090008 and the support from the Italian Ministry of Educa­
b/se tion, University and Research, PRIN-2017 project 201799ZJSN: “Tech­
Share of college workers 0.251197*** nological change, industry evolution and employment dynamics.”
(0.075)
Share of trained workers 0.046604*** Appendix
(0.017)
Share of fixed-term workers ¡0.081110
(0.055) (Table A1, Table A2, Table A3, Table A4, Table A5, Table A6)
Second level agreement 0.051645**
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