Ultra-fast broadband and innovation intensity A quantitative analysis on Italian firms

This master thesis aims at investigating the causal relationship existing among the recent diffusion of ultra-fast broadband and the innovation behavior of Italian enterprises, as depicted by the evolution of their patent portfolios. Latest breakthroughs in the ICT field have been positively acknowledged and soon embraced by both national and international regulators, whose policy interventions emphasize the empowering benefits of these technologies. In fact, both in the common sense and in economic literature, they are by now deemed to play a crucial role for modern entrepreneurship, both in terms of direct business advantages and indirect spillovers, which open new competitive opportunities. To this extent, a substantial improvement in ultra-fast broadband services is that associated to optical fibers applications: while establishing as a dominant design for connectivity infrastructures of today and tomorrow, this transmission mean came to the fore in the current debate around future directions for the digital revolution, engaging both scholars and industry experts in the comprehension, measurement and anticipation of its possible, multi-faceted impacts on firm performances. Concurrently, a diffuse tendency to shift towards more innovation-oriented business models can be easily read underneath the figures of recent patenting procedures and patent-related transactions. Rationally designed to remunerate firm exploratory endeavors, while simultaneously pursuing a global optimum for society development, industrial patents increasingly represent strategical fixed points within a world where virtuous cycles of “technology spurring technology” keep accelerating the continuous displacement of the frontier of knowledge. To start comparing these two macro trends, a finer discussion on the dual nature of this thesis builds up the bulk of Chapter 1, using real-world data to introduce the relevant background themes and proactively interact the keywords to be further deepened in the following sections. Once the context has been framed with these technical and factual references, the dissertation steps into the empirical base of the core analysis: a unique set of balanced panel data, gathering yearly observations from 2013 to 2019, where firm economic information was matched with a municipality-based mapping of Italian fiber roll-out, following the birth and expansion of Telecom Italia’s New Generation TLC Network. Hence, Chapter 2 is devoted to the discovery and quantitative understanding of the database content: some preparatory, descriptive deductions are presented, seamlessly linking together the progressive fiber wiring of Italian municipalities to the contemporary dynamics of firms’ patent portfolios. The qualitative result is a conceptual walk among the operative ingredients for the subsequent estimation outcomes, always keeping ultra-fast broadband as the leitmotiv pushing forward the discussion. Accordingly, statistical inference and econometric modelling of the relationship under study, enabled by the peculiar structure of the dataset, is finally deployed along Chapter 3. Here, argumentations from previous chapters about the expected space-time effects of fiber connectivity on patents are substantiated with systematic evidence from the available sample: this is preliminarily carried out by shaping regressions with an OLS setting, later refined and enhanced by an instrumental variable counterpart, dealing with likely endogeneity concerns.