Fact of the Week: Firms With In-House Software Development Are Twice as Likely to Innovate as Firms That Conduct No Software Development

Source: Martin Andersson, Anna Kusetogullari, and Joakim Wernberg, “Software Development and Innovation—Exploring the Software Shift in Innovation in Swedish Firms,” IFN Working Paper No. 1347, 2020.

Commentary: There has been a dramatic shift in innovation towards software development, which has grown to become critical across all industries. Analysis of a survey of Swedish firms found that 65 percent of firms that conduct in-house software development had recently introduced a new product or service, compared to 46 percent for firms that contract out software development and 32 percent for firms that do no software development. Further, new products account for 16 percent of sales for firms that develop software in-house, more than double the value for firms with no in-house software development, 6 percent.