Earth Observation data, innovation and economic performance: a study of the downstream sector in Italy

Abstract

The increasing availability of external data in the realm of big data significantly impacts the operations and performance of businesses. In this study, we focus on Earth Observation (EO) technology, which supplies an extensive range of data related to Earth's chemical, biological, physical, and societal aspects. Our primary goal is to understand how the utilisation of EO data affects companies operating in the downstream sector. These enterprises possess the expertise and capabilities to extract valuable insights and information from EO data. We use a rich and innovative dataset representing 74% of the Italian EO downstream sector. The results show that EO data have heterogeneous impacts across downstream firms. Economic performance and innovation are positively correlated only for a subset of firms, especially the ones in the northern regions. Firms in the centre of Italy exploit the spillover of being close to large space infrastructures, but their performance in economic and innovation terms is mixed. The sub-sample in the South of Italy innovates due to EO but performs poorly economically. We discuss the determinants of such discrepancies and suggest policy and managerial implications for the industry's future development.