ICT Investment, Productivity and Efficiency: Evidence at Firm Level Using a Stochastic Frontier Approach
AbstractWe analyze the determinants of ICT investment and the impact of information technology on productivity and efficiency on a representative sample of small and medium sized Italian firms. In order to test the most relevant theoretical predictions from the ICT literature we evaluate the impact of investment in software, hardware and telecommunications of these firms on a series of intermediate variables and on productivity. Among intermediate variables we consider the demand for skilled workers, the introduction of new products and processes and the rate of capacity utilization. Among productivity measures we include total factor productivity, the productivity of labor, and the distance from the “best practice” by using a stochastic frontier approach. Our results show that the effect of ICT investment on firm efficiency can be more clearly detected at firm level data by decomposing it into software and telecommunications investment. We find that telecommunications investment positively affects the creation of new products and processes, while software investment increases the demand for skilled workers, average labor productivity and proximity to the optimal production frontier. We interpret these results by arguing that ICT investment modifies the trade-off between scale and scope economies. While software investment increases the scale of firm operations, telecommunications investment creates a “flexibility option” easing the switch from a Fordist to a flexible network productive model in which products and processes are more frequently adapted to satisfy consumers’ taste for variety. Copyright Kluwer Academic Publishers 2003
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by Springer in its journal Journal of Productivity Analysis.
Volume (Year): 20 (2003)
Issue (Month): 2 (September)
Contact details of provider:
Web page: http://www.springerlink.com/link.asp?id=100296
ICT investment; real options; stochastic frontiers;
Other versions of this item:
- Leonardo Becchetti & Luigi Paganetto & David Andres Londono Bedoya, 2003. "ICT Investment, Productivity and Efficiency: Evidence at Firm Level Using a Stochastic Frontier Approach," CEIS Research Paper 29, Tor Vergata University, CEIS.
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Leech, D. & Leahy, J., 1989.
"Ownership Structure, Control Type Classifications And The Performance Of Large British Companies,"
The Warwick Economics Research Paper Series (TWERPS)
345, University of Warwick, Department of Economics.
- Leech, Dennis & Leahy, John, 1991. "Ownership Structure, Control Type Classifications and the Performance of Large British Companies," Economic Journal, Royal Economic Society, vol. 101(409), pages 1418-37, November.
- McConnell, John J. & Servaes, Henri, 1990. "Additional evidence on equity ownership and corporate value," Journal of Financial Economics, Elsevier, vol. 27(2), pages 595-612, October.
- Ernst R. Berndt & Catherine J. Morrison & Larry S. Rosenblum, 1992.
"High-Tech Capital Formation and Labor Composition in U.S. Manufacturing Industries: An Exploratory Analysis,"
NBER Working Papers
4010, National Bureau of Economic Research, Inc.
- Berndt, Ernst R. & Morrison, Catherine J. & Rosenblum, Larry S., 1992. "High-tech capital formation and labor composition in U.S. manufacturing industries : an exploratory analysis," Working papers 3414-92., Massachusetts Institute of Technology (MIT), Sloan School of Management.
- Kiley, Michael T, 1999.
"The Supply of Skilled Labour and Skill-Biased Technological Progress,"
Royal Economic Society, vol. 109(458), pages 708-24, October.
- Michael T. Kiley, 1997. "The supply of skilled labor and skill-based technological progress," Finance and Economics Discussion Series 1997-45, Board of Governors of the Federal Reserve System (U.S.).
- N Dryden & Stephen Nickell & D Nicolitsas, 1996.
"What Makes Firms Perform Well?,"
CEP Discussion Papers
dp0308, Centre for Economic Performance, LSE.
- Stephen Nickell, 1993.
"Competition and Corporate Performance,"
CEP Discussion Papers
dp0182, Centre for Economic Performance, LSE.
- Martin Neil Baily & Robert J. Gordon, 1988. "The Productivity Slowdown, Measurement Issues, and the Explosion of Computer Power," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 19(2), pages 347-432.
- Rafael La Porta & Florencio Lopez-de-Silane & Andrei Shleifer, 1998.
"Corporate Ownership Around the World,"
NBER Working Papers
6625, National Bureau of Economic Research, Inc.
- Rafael La Porta & Florencio Lopez-de-Silanes & Andrei Shleifer, 1998. "Corporate Ownership Around the World," Harvard Institute of Economic Research Working Papers 1840, Harvard - Institute of Economic Research.
- Berndt, Ernst R. & Morrison, Catherine J., 1992.
"High-tech capital formation and economic performance in U.S. manufacturing industries : an exploratory analysis,"
3419-92., Massachusetts Institute of Technology (MIT), Sloan School of Management.
- Berndt, Ernst R. & Morrison, Catherine J., 1995. "High-tech capital formation and economic performance in U.S. manufacturing industries An exploratory analysis," Journal of Econometrics, Elsevier, vol. 65(1), pages 9-43, January.
- Vickers, John, 1995. "Concepts of Competition," Oxford Economic Papers, Oxford University Press, vol. 47(1), pages 1-23, January.
- Stephen D. Oliner & Daniel E. Sichel, 1994. "Computers and Output Growth Revisited: How Big Is the Puzzle?," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 25(2), pages 273-334.
- Frank R. Lichtenberg, 1996. "The Output Contributions of Computer Equipment and Personnel: A Firm- Level Analysis," NBER Working Papers 4540, National Bureau of Economic Research, Inc.
- Nelson, Richard R, 1981. "Research on Productivity Growth and Productivity Differences: Dead Ends and New Departures," Journal of Economic Literature, American Economic Association, vol. 19(3), pages 1029-64, September.
- Stiroh, Kevin J, 1998. "Computers, Productivity, and Input Substitution," Economic Inquiry, Western Economic Association International, vol. 36(2), pages 175-91, April.
- David, Paul A, 1990. "The Dynamo and the Computer: An Historical Perspective on the Modern Productivity Paradox," American Economic Review, American Economic Association, vol. 80(2), pages 355-61, May.
- Battese, George E. & Coelli, Tim J., 1988. "Prediction of firm-level technical efficiencies with a generalized frontier production function and panel data," Journal of Econometrics, Elsevier, vol. 38(3), pages 387-399, July.
- Meijers, Huub, 2006.
"Diffusion of the internet and low inflation in the information economy,"
Open Access publications from Maastricht University
urn:nbn:nl:ui:27-14681, Maastricht University.
- Meijers, Huub, 2006. "Diffusion of the Internet and low inflation in the information economy," Information Economics and Policy, Elsevier, vol. 18(1), pages 1-23, March.
- Heshmati, Almas & Kumbhakar, Subal C., 2010.
"Technical Change and Total Factor Productivity Growth: The Case of Chinese Provinces,"
IZA Discussion Papers
4784, Institute for the Study of Labor (IZA).
- Almas Heshmati & Subal C. Kumbhakar, 2010. "Technical Change and Total Factor Productivity Growth: The Case of Chinese Provinces," TEMEP Discussion Papers 201054, Seoul National University; Technology Management, Economics, and Policy Program (TEMEP), revised Feb 2010.
- Stefanie Haller & Iulia Siedschlag, 2011.
"Determinants of ICT adoption: evidence from firm-level data,"
Taylor and Francis Journals, vol. 43(26), pages 3775-3788.
- Haller, Stefanie & Siedschlag, Iulia, 2008. "Determinants of ICT Adoption: Evidence from Firm-Level Data," Papers DYNREG29, Economic and Social Research Institute (ESRI).
- Leonardo Becchetti & Fabrizio Adriani, 2003.
"Does the Digital Divide Matter? The Role of Information and Communication Technology in Cross-country Level and Growth Estimates?,"
CEIS Research Paper
4, Tor Vergata University, CEIS.
- Leonardo Becchetti & Fabrizio Adriani, 2005. "Does the digital divide matter? The role of information and communication technology in cross-country level and growth estimates," Economics of Innovation and New Technology, Taylor and Francis Journals, vol. 14(6), pages 435-453.
- Bagella , Michele & Becchetti , Leonardo & Hasan , Iftekhar, 2004. "The anticipated and concurring effects of EMU: exchange rate volatility, institutions and growth," Research Discussion Papers 15/2004, Bank of Finland.
- Stefanie Haller & Iulia Traistaru-Siedschlag, 2007. "The Adoption of ICT: Firm-Level Evidence from Irish Manufacturing Industries," Papers WP204, Economic and Social Research Institute (ESRI).
- Siedschlag, Iulia & Zhang, Xiaoheng & Smith, Donal, 2009. "What Determines the Attractiveness of EU Regions to the Location of Multinational Firms in the ICT Sector?," Papers DYNREG45, Economic and Social Research Institute (ESRI).
- Gianfranco E. Atzeni & Oliviero A. Carboni, 2006. "The Effects of Subsidies on Investment: an Empirical Evaluation on ICT in Italy," Revue de l'OFCE, Presses de Sciences-Po, vol. 97(5), pages 279-302.
- G. Medda & C. Piga, 2004. "R&S e spillover industriali: un'analisi sulle imprese italiane," Working Paper CRENoS 200406, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia.
- Sophia P. Dimelis & Sotiris K. Papaioannou, 2011. "Technical Efficiency and the Role of ICT: A Comparison of Developed and Developing Countries," Emerging Markets Finance and Trade, M.E. Sharpe, Inc., vol. 47(0), pages 40-53, July.
- Castiglione, Concetta & Infante, Davide, 2012. "ICTs and lags in technical efficiency gains. A stochastic frontier approach over a panel of Italian manufacturing firms," MPRA Paper 51071, University Library of Munich, Germany.
- Aleksandra Bradic Martinovic & Aleksandar Zdravkovic, 2012. "Information and Communication Techologies in Basis for the Improvement of Companies Performance in Serbia," Book Chapters, Institute of Economic Sciences.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Guenther Eichhorn) or (Christopher F. Baum).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.