Technical Efficiency in an R&D Intensive Industry: Finnish ICT Manufacturing
AbstractTechnical efficiency levels in Finnish ICT manufacturing are established by applying a stochastic frontier model and retrieving Method of Moments and Battese-Coelli efficiency measures to identify both permanent and time-varying efficiency levels, as well as determinants of inefficiency such as R&D investments. The sample is representative of almost half of corporate R&D in Finland in 1990-2003. Results show wide and surprisingly persistent disparities in technical efficiency, with the average firm enjoying only about half of the frontier firm?s technical efficiency level. The rhetoric of Finland featuring on the global technology frontier is based on few firms. Most Finnish firms are constrained to catch-up with the frontier rather than advance it by means of innovation, implying inappropriateness of an innovation focus in policy. The persistence of efficiencies suggests that high risks involved in innovative activity account for only a share of productivity differences. There appear to be considerable permanent gaps between firms related e.g. to managerial and organisational efficiency.
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Bibliographic InfoPaper provided by Government Institute for Economic Research Finland (VATT) in its series Discussion Papers with number 389.
Date of creation: 04 May 2006
Date of revision:
Find related papers by JEL classification:
- O39 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Other
- L63 - Industrial Organization - - Industry Studies: Manufacturing - - - Microelectronics; Computers; Communications Equipment
- O30 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-07-09 (All new papers)
- NEP-CSE-2006-07-09 (Economics of Strategic Management)
- NEP-EFF-2006-07-09 (Efficiency & Productivity)
- NEP-INO-2006-07-09 (Innovation)
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