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Productivity in Information Service Industries: a Panel Analysis of Japanese Firms

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  • Futoshi Kurokawa
  • Kiyohiko G. Nishimura

Abstract

We examine factors determining productivity of information-technology service activities at firm level, using most comprehensive data of information service industries in Japan. We focus on the degree of modularisation and resulting outsourcing and economies/diseconomies of scale in software development, and changes. We find that outsourcing has persistent negative effects on total factor productivity, suggesting not only productivity-enhancing modularisation is not fully utilised but also productivity-hindering remnants of traditional main-contractor-subcontractor relations still prevail in Japanese information service industries. We also find diseconomies of scale in software development, suggesting less efficient communication among development team members. JEL Classification: L23, L25, L86, O33.

Suggested Citation

  • Futoshi Kurokawa & Kiyohiko G. Nishimura, 2006. "Productivity in Information Service Industries: a Panel Analysis of Japanese Firms," Revue de l'OFCE, Presses de Sciences-Po, vol. 97(5), pages 351-371.
    • Handle: RePEc:cai:reofsp:reof_073_0351
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    References listed on IDEAS

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    Cited by:

    1. KUROKAWA Futoshi, 2006. "The Contributions of IT-related Production Factors in Japanese Companies: The Estimation of Excess Returns(in Japanese)," ESRI Discussion paper series 166, Economic and Social Research Institute (ESRI).

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    More about this item

    Keywords

    information service industry; productivity; modularization and outsourcing; Japan; firm-level data;
    All these keywords.

    JEL classification:

    • L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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