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The Effect of Organizational Innovation and Information and Communications Technology on Firm Performance

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  • Surendra Gera
  • Wulong Gu

Abstract

A key lesson from the U.S. literature on the impact of ICT on productivity is that ICT can only be effective if appropriate organizational structures are in place. This article by Surendra Gera of Industry Canada and Wulong Gu of Statistics Canada provides Canadian evidence to support this view. Using the Workplace and Employee Survey, the authors find evidence that firms that implement organizational changes and introduce ICT have a higher incidence of productivity improvement, increased sales and profits, and product and process innovation than firms that do not follow this path. Their findings suggest that to be successful firms typically need to adopt ICT as part of a system or cluster of mutualy reinforcing organizational approaches.

Suggested Citation

  • Surendra Gera & Wulong Gu, 2004. "The Effect of Organizational Innovation and Information and Communications Technology on Firm Performance," International Productivity Monitor, Centre for the Study of Living Standards, vol. 9, pages 37-51, Fall.
    • Handle: RePEc:sls:ipmsls:v:9:y:2004:4
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    References listed on IDEAS

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    Cited by:

    1. Rashid Nikzad, 2023. "Evaluation of Productivity in the Canadian Copyrightbased Industries," Athens Journal of Business & Economics, Athens Institute for Education and Research (ATINER), vol. 9(3), pages 273-284, July.
    2. Sandulli, Francesco D. & Baker, Paul M.A. & López-Sánchez, José I., 2013. "Can small and medium enterprises benefit from skill-biased technological change?," Journal of Business Research, Elsevier, vol. 66(10), pages 1976-1982.
    3. Meyer, Jenny, 2007. "Older Workers and the Adoption of New Technologies," ZEW Discussion Papers 07-050, ZEW - Leibniz Centre for European Economic Research.
    4. Samoilenko, Sergey & Osei-Bryson, Kweku-Muata, 2008. "An exploration of the effects of the interaction between ICT and labor force on economic growth in transition economies," International Journal of Production Economics, Elsevier, vol. 115(2), pages 471-481, October.
    5. Maria José Sousa & Miguel González-Loureiro, 2016. "Employee knowledge profiles – a mixed-research methods approach," Information Systems Frontiers, Springer, vol. 18(6), pages 1103-1117, December.
    6. Bernhard Dachs & Martin Hud & Christian Köhler & Bettina Peters, 2016. "Employment Effects of Innovations over the Business Cycle: Firm-Level Evidence from European Countries," DEM Discussion Paper Series 16-20, Department of Economics at the University of Luxembourg.
    7. Platero Jaime, Manuel & Benito Hernández, Sonia & Rodríguez Duarte, Antonio, 2017. "The moderator effect of training in the adoption of ICT in microenterprises," Cuadernos de Gestión, Universidad del País Vasco - Instituto de Economía Aplicada a la Empresa (IEAE).
    8. Richard Dion & Robert Fay, 2008. "Understanding Productivity: A Review of Recent Technical Research," Discussion Papers 08-3, Bank of Canada.
    9. Someshwar Rao & Andrew Sharpe & Jeremy Smith, 2005. "An Analysis of the Labour Productivity Growth Slowdown in Canada since 2000," International Productivity Monitor, Centre for the Study of Living Standards, vol. 10, pages 3-23, Spring.
    10. Jerzy Rosinski, 2012. "Attitudes of the IT staff against employing organization as a challenge for the development of IT businesses (Postawy pracownikow branzy IT wobec zatrudniajacych organizacji jako wyzwanie dla rozwoju ," Problemy Zarzadzania, University of Warsaw, Faculty of Management, vol. 10(38), pages 229-247.
    11. Jasinska-Biliczak Anna & Kowal Jolanta, 2020. "Innovation Capability Development in Regional Entrepreneurship: The Case of Economies in Transition," European Research Studies Journal, European Research Studies Journal, vol. 0(4), pages 6-32.
    12. Adel Ben Khalifa, 2019. "Direct and Complementary Effects of Investment in Knowledge-Based Economy on Innovation Performance in Tunisian Firms," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 10(2), pages 561-589, June.
    13. Jean-Francois Arsenault & Andrew Sharpe, 2008. "An Analysis of the Causes of Weak Labour Productivity Growth in Canada since 2000," International Productivity Monitor, Centre for the Study of Living Standards, vol. 16, pages 14-39, Spring.
    14. Petr Hanel, 2007. "Productivity and innovation: an overview of the issues," Cahiers de recherche 07-22, Departement d'économique de l'École de gestion à l'Université de Sherbrooke.
    15. Orozco, Luis Antonio & Sanabria, John Alirio & Sosa, Juan Camilo & Aristizabal, Jeimy & López, Liliana, 2022. "How do IT investments interact with other resources to improve innovation?," Journal of Business Research, Elsevier, vol. 144(C), pages 358-365.
    16. Grillitsch, Markus & Schubert, Torben & Srholec, Martin, 2019. "Knowledge base combinations and firm growth," Research Policy, Elsevier, vol. 48(1), pages 234-247.
    17. Centre for the Study of Living Standards, 2012. "The Impact of Information and Communication Technology on the Productivity of the Canadian Transportation System: A Macroeconomic Approach for the Air and Rail Sectors," CSLS Research Reports 2012-07, Centre for the Study of Living Standards.
    18. Rinaldo Evangelista & Maria Savona, 2010. "Innovation and Employment in Services," Chapters, in: Faïz Gallouj & Faridah Djellal (ed.), The Handbook of Innovation and Services, chapter 16, Edward Elgar Publishing.
    19. Sadaf Bashir & Uwe Matzat & Bert Sadowski, 2014. "The Adoption of Information and Communication Technologies in the Design Sector and their impact on Firm Performance: Evidence from the Dutch Design Sector," Working Papers 14-01, Eindhoven Center for Innovation Studies, revised Feb 2014.
    20. Evangelista, Rinaldo & Vezzani, Antonio, 2010. "The economic impact of technological and organizational innovations. A firm-level analysis," Research Policy, Elsevier, vol. 39(10), pages 1253-1263, December.
    21. MOTHE Caroline & NGUYEN Thi Thuc Uyen, 2011. "Do firms rely on sources of information for organizational innovation?," LISER Working Paper Series 2011-39, Luxembourg Institute of Socio-Economic Research (LISER).
    22. Ana Ferreira & Ana Lúcia Teixeira & Ana Roque Dantas, 2015. "Non-technological innovation activities mediate the impacts of the intra- and extra-organizational contexts on technological innovation outputs," Enterprise and Work Innovation Studies, Universidade Nova de Lisboa, IET/CICS.NOVA-Interdisciplinary Centre on Social Sciences, Faculty of Science and Technology, vol. 11(11), pages 9-43, December.
    23. Meyer, Jenny, 2008. "The Adoption of New Technologies and the Age Structure of the Workforce," ZEW Discussion Papers 08-045, ZEW - Leibniz Centre for European Economic Research.
    24. Sarbu, Miruna, 2022. "The impact of industry 4.0 on innovation performance: Insights from German manufacturing and service firms," Technovation, Elsevier, vol. 113(C).

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    More about this item

    Keywords

    Productivity Growth; Productivity; Information and Communication Technologies; Information Technology; Firm-level; Firm Performance; Human Capital; Training; Management Practices; Organization; Organizational Change; Organizational Innovation; Process Innovation; Innovation;
    All these keywords.

    JEL classification:

    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • L80 - Industrial Organization - - Industry Studies: Services - - - General
    • M53 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Training
    • M12 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Personnel Management; Executives; Executive Compensation
    • O51 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - U.S.; Canada

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