Firm-level productivity and profitability effects of managerial and organisational capabilities and innovations

Using data for a large sample of European firms, the present work investigates the productivity effects associated with the generation of the technologies related to the Fourth Industrial Revolution (4IR) and with managerial and organisational capabilities (MOCs) related to the adoption of new managerial practices, such as the ISO 9001 certification. By adopting a distance to frontier framework (DTF), in the first part of the study, we find that companies innovating in the fields of 4IR (mainly Artificial Intelligence) have a significantly faster produc­tivity growth and this is proportional to how far they lie behind the frontier. In the second part, we investigate whether new managerial practices help falling-behind companies fill the gap with firms with the highest levels of productivity, profitability and average wages paid in Italy. We find that the ISO 9001 certification helps firms below the frontier to partially recover the gap in terms of multifactor productivity (MFP) and profits.