Twin transition and spatial embeddedness: an empirical analysis on the Italian provinces

This paper investigates the factors influencing the adoption of digital, green, and twin transition (TT) practices across Italian provinces, considering the impact of public funding dispersion. Using the novel PLOTTI dataset, which integrates province level data from the ISTAT business census, the national database of state aids (RNA), and Moody’s AIDA, we capture the diffusion of digital, green, and twin innovations at the local level. Our empirical analysis relies on a crosssectional econometric framework that incorporates spatial dependencies to identify provincial spillovers. Preliminary results reveal that a more evenly distributed allocation of public funds, in other words, lower concentration, facilitates broader engagement with both digital and green innovations, suggesting that inclusive policy approaches accelerate TT adoption in local production systems (LPSs). We discuss implications for policymakers and business leaders, emphasizing the need for inclusive public interventions, collaborative networks, and place leadership arrangements that can help overcome the barriers to twin transition. While the paper highlights the importance of local production structures in Italy, we also outline that the lessons learned extend to any region seeking to reconcile sustainability goals with digital transformation.