Unlocking Frontier Technologies in Firms: Insights from the Past, Challenges for the Future – TECHNOFIRMS

The landscape of jobs and work is evolving at an unprecedented speed, driven by advances in computer and engineering technologies, such as artificial intelligence and robotics, which have moved from the factory floor to an expanding array of knowledge and service occupations. There is no indication that this trend will slow down in the coming years. These changes promise benefits to society with the creation of new industries and occupations, increased productivity and opportunities for innovation, but they bring risks as well: many of these technological advances have an automation component which erodes human skills, scales back the need for some workers and might even eliminate some job sectors. “Winner-takes-all” effects raise concerns about the magnitude of the market power of the most successful big tech companies and their potential negative impact on aggregate welfare.

Whether benefits will outscore threats is at this stage an entirely open question, both to social scientists and policy makers.
In the TECHNOFIRMS project, we hypothesize that this quantification challenge can be addressed by adopting a much more detailed look at how firms actually deal with new technologies than previously achieved.

We first plan to leverage the unique richness and granularity of the French information system about firms that is available from French administrations. The recent development of advanced machine learning methods (together with complementary case studies to validate them) has the potential to deal with heterogenous statistical sources and detect technology users at a large scale. This would allow constructing the first population-wide matched firm-worker dataset allowing to address our research question.

We will then investigate the economic mechanisms and societal infrastructures that lead to the adoption of new technologies and determine their impact via two main axes of investigation.

The first axis will investigate the interplay between firms’ environments and their technology adoption decision. In a first sub-project, we will inspect to what extent firms’ technology adoption decisions are shaped by the spatial constraints firms face. Our hypothesis is that a benefit of some technologies lies precisely in their ability to lower the costs associated with these constraints, either for firms, of for their workers. This implies that their adoption and overall socio-economic impact is most likely tied to firms’ and workers’ constraints: in particular, those related to space. In the second sub-project, we will inspect the interactions of technology adoption decisions with the market conditions firms face, in order to inspect the potential sources of competitive advantage associated with the current wave of technologies. This will allow us to dissect at the firm level what mechanisms could lead to excessive concentration and market power, a point that is currently highly debated in the literature.

Our second axis of investigation will focus on the role played by labour, and more precisely by the way it is organized, in determining whether and which technologies are adopted, what are the productivity gains and how they are split between stakeholders. A first sub-project will focus on management and organizational aspects (within firms): since the largest firms attain a macro-economic importance, their internal arrangements upon technology adoption are likely to have a significant impact on aggregate outcomes such as inequality. The second sub-project will rather consider the way workers themselves react to new technologies. Our research assumption is that institutions regulating labour (such as unions) might well be critical, since they constrain work conditions within firms, thus potentially determining whether employers find it profitable to adopt different types of new technologies, and whether in turn, workers will resist or accept technology adoption, with further potential political implications.