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Innovationa and information technology in services

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  • Georg Licht
  • Dietmar Moch

Abstract

The missing effect of investments of firms in information and communication technologies on productivity is studied by various recent papers (e.g. Oliner and Sichels 1994, Landauer 1995, Brynjolfsson and Hitt 1996). Several explanations are given for this missing link. Our paper deals with two of them, using two newly available data sets for the German service sector. Using data from a survey of innovative activities in services we show that investment in information technology (IT) has a stronger effect on the quality of services than on the productivity of the IT-using firm. IT investment seems to be especially effective when innovations enhance the delivery speed and the spatial or temporal availability of service. Moreover, data of the German IT survey point towards the need to differentiate between types of IT investment. It is shown that especially the most recent generation of IT as indicated by the number of PCs used is the source of productivity growth whereas traditional IT like mainframes exhibit only minor productivity effects. We conclude from our results that mismeasurement of the quality of new products and processes is one important reason for our inability to uncover the productivity effect of IT. Moreover, dividing IT-investment by the type of IT clarifies that the kind of IT a firm uses is more important for productivity growth what than its quantity. In any case we expect that the bulk of the IT-related productivity growth is still to come. In order to realize the benefits from IT investment entirely, firms have to undergo a large restructuring of business functions. --

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Bibliographic Info

Article provided by Canadian Economics Association in its journal Canadian Journal of Economics.

Volume (Year): 32 (1999)
Issue (Month): 2 (April)
Pages: 363-383

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Handle: RePEc:cje:issued:v:32:y:1999:i:2:p:363-383

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References

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  1. Nelson, Randy A & Tanguay, Tim L & Patterson, Christopher D, 1994. "A Quality-Adjusted Price Index for Personal Computers," Journal of Business & Economic Statistics, American Statistical Association, vol. 12(1), pages 23-31, January.
  2. S. Black & L. Lynch, 1997. "How to compete: the impact of workplace practices and information technology on productivity," LSE Research Online Documents on Economics 20298, London School of Economics and Political Science, LSE Library.
  3. William Lehr & Frank R. Lichtenberg, 1996. "Computer Use and Productivity Growth in Federal Government Agencies, 1987 to 1992," NBER Working Papers 5616, National Bureau of Economic Research, Inc.
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Citations

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Cited by:
  1. Petr Hanel, 2004. "Innovation in the Canadian Service Sector," Cahiers de recherche 04-03, Departement d'Economique de la Faculte d'administration à l'Universite de Sherbrooke.
  2. Thomas Hempell, 2005. "Does experience matter? innovations and the productivity of information and communication technologies in German services," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 14(4), pages 277-303.
  3. Hempell, Thomas, 2002. "What's Spurious, What's Real? Measuring the Productivity Impacts of ICT at the Firm-Level," ZEW Discussion Papers 02-42, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  4. Luis Rubalcaba, 2007. "Services in European Policies," Bruges European Economic Policy Briefings 16, European Economic Studies Department, College of Europe.
  5. Meyer, Jenny, 2009. "Does social software support service innovation?," ZEW Discussion Papers 09-046, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  6. Corrocher, Nicoletta, 2006. "Internet adoption in Italian banks: An empirical investigation," Research Policy, Elsevier, vol. 35(4), pages 533-544, May.
  7. Falk, Martin & Seim, Katja, 1999. "Workers' skill level and information technology: evidence from German service firms," ZEW Discussion Papers 99-14, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  8. Irene Bertschek & Ulrich Kaiser, 2004. "Productivity Effects of Organizational Change: Microeconometric Evidence," Management Science, INFORMS, vol. 50(3), pages 394-404, March.
  9. Hipp, Christiane & Grupp, Hariolf, 2005. "Innovation in the service sector: The demand for service-specific innovation measurement concepts and typologies," Research Policy, Elsevier, vol. 34(4), pages 517-535, May.
  10. Ki H. Kang & Jina Kang, 2009. "Do External Knowledge Sourcing Methods Matter in Service Innovation? Analysis of South Korean Service Firms," TEMEP Discussion Papers 200908, Seoul National University; Technology Management, Economics, and Policy Program (TEMEP), revised Aug 2009.
  11. Ebling, Günther & Janz, Norbert, 1999. "Export and innovation activities in the German service sector: empirical evidence at the firm level," ZEW Discussion Papers 99-53, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  12. Antonio Musolesi & Jean-Pierre Huiban, 2010. "Innovation and productivity in knowledge intensive business services," Journal of Productivity Analysis, Springer, vol. 34(1), pages 63-81, August.
  13. Brigitte Preissl, 2003. "E-Business in Service Industries: Usage Patterns and Service Gaps," Discussion Papers of DIW Berlin 373, DIW Berlin, German Institute for Economic Research.
  14. Abdur Chowdhury, 2003. "Information technology and productivity payoff in the banking industry: evidence from the emerging markets," Journal of International Development, John Wiley & Sons, Ltd., vol. 15(6), pages 693-708.
  15. Meijers, Huub, 2007. "ICT Externalities: Evidence from cross country data," MERIT Working Papers 021, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
  16. Martin, Ludivine, 2007. "The impact of technological changes on incentives and motivations to work hard," IRISS Working Paper Series 2007-15, IRISS at CEPS/INSTEAD.
  17. Sang-Yong Tom Lee & Xiao Jia Guo, 2004. "Information and Communications Technology (ICT) and Spillover: A Panel Analysis," Econometric Society 2004 Far Eastern Meetings 722, Econometric Society.
  18. Nicoletta Corrocher & Lucia Cusmano & Andrea Morrison, 2009. "Modes of innovation in knowledge-intensive business services evidence from Lombardy," Journal of Evolutionary Economics, Springer, vol. 19(2), pages 173-196, April.

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