Technology diffusion, techies, and firms' responses to shocks – ARFT22

In just a few months’ time, the COVID-19 crisis has brought about years worth of change in the way corporations do business. Many firms have accelerated the digitalization of their customer and supply-chain interactions and their internal operations, and have exhibited a surge in investment in these dimensions. The objectives of this project are interrelated through their focus on firms as the nexus of technological change and labor market adjustment. First, against the backdrop of rapid technological change, current and future, we study how technology diffuses in the economy through firms’ adoption and the consequences for firm productivity growth, mergers and acquisitions (M&As) and spatial inequalities. The second objective is to study how firms respond to shocks in the context of dual labor markets.
In WP1 we build on our previous work, Harrigan, Reshef & Toubal (2021) that is now in the process of revision at the Review of Economic Studies. We leverage a novel predictor for technology adoption at the firm level, first developed by Harrigan, Reshef & Toubal (2016): the techies. These techies are engineers and technicians with skills and experience in science, technology, engineering and math (STEM). They are essential to productivity growth, by virtue of being the creators of new products and processes, and as mediators of technology adoption at the firm level (Tambe & Hitt 2012, 2014). We deepen this analysis and study the direct effect of techies on technological change. In WP2 we expand the analysis to study a novel channel through which techies affect technology diffusion, via M&As, by attracting multinational enterprises (MNEs) and domestic firms and by enabling technology transfer from purchaser to target firm. In WP3 we study how technological change, mediated by techies, affects spatial inequalities through firm-establishment re-organization. In WP4 we study the consequences of France’s dual labor market for firms’ responses to shocks.