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ICTs and lags in technical efficiency gains. A stochastic frontier approach over a panel of Italian manufacturing firms

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  • Castiglione, Concetta
  • Infante, Davide

Abstract

This paper analyses the relationship between investment in Information and Communication Technologies (ICTs) and Technical Efficiency (TE). It uses a panel dataset of Italian manufacturing firms during the period 1995-2003. In contrast to much of the existing literature which focuses on the impact of ICT on labour or multifactor productivity, the paper analyses the relationship between ICT and TE using a stochastic frontier approach. Results show that ICT investment is positively associated with productivity and efficiency, but that the elasticities are lower than those associated with non-ICT capital and labour. Moreover, ICT investments have a positive effect on firm TE, and the impact of ICTs reduces firm inefficiency with a strong time lag since their adoption. Finally, the paper makes a methodological contribution by showing that a Cobb-Douglas production frontier is rejected in favour of a translog one.

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File URL: http://mpra.ub.uni-muenchen.de/51071/
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File URL: http://mpra.ub.uni-muenchen.de/55466/
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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 51071.

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Date of creation: 30 Mar 2012
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Handle: RePEc:pra:mprapa:51071

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Related research

Keywords: ICT; Stochastic Frontier; Technical Efficiency; Manufacturing Firms;

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  1. Hall, Bronwyn H. & Mairesse, Jacques, 1995. "Exploring the relationship between R&D and productivity in French manufacturing firms," Journal of Econometrics, Elsevier, vol. 65(1), pages 263-293, January.
  2. Robert J. Gordon, 2013. "U.S. Productivity Growth: The Slowdown Has Returned After a Temporary Revival," International Productivity Monitor, Centre for the Study of Living Standards, vol. 25, pages 13-19, Spring.
  3. Timothy F. Bresnahan & Erik Brynjolfsson & Lorin M. Hitt, 1999. "Information Technology, Workplace Organization and the Demand for Skilled Labor: Firm-Level Evidence," NBER Working Papers 7136, National Bureau of Economic Research, Inc.
  4. Paola Giuri & Salvatore Torrisi & Natalia Zinovyeva, 2008. "ICT, skills, and organizational change: evidence from Italian manufacturing firms," Industrial and Corporate Change, Oxford University Press, vol. 17(1), pages 29-64, February.
  5. Stephen D. Oliner & Daniel E. Sichel, 2000. "The resurgence of growth in the late 1990s: is information technology the story?," Finance and Economics Discussion Series 2000-20, Board of Governors of the Federal Reserve System (U.S.).
  6. Chen, Wen-Chih & McGinnis, Leon F., 2007. "Reconciling ratio analysis and DEA as performance assessment tools," European Journal of Operational Research, Elsevier, vol. 178(1), pages 277-291, April.
  7. Matteo Bugamelli & Patrizio Pagano, 2004. "Barriers to investment in ICT," Applied Economics, Taylor & Francis Journals, vol. 36(20), pages 2275-2286.
  8. Sergio Destefanis & Vania Sena, 2007. "Patterns of corporate governance and technical efficiency in Italian manufacturing," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 28(1), pages 27-40.
  9. Stephen D. Oliner & Daniel E. Sichel & David M. Byrne, 2013. "Is the information technology revolution over?," Working Papers 37301, American Enterprise Institute.
  10. 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.
  11. Brynjolfsson, Erik. & Hitt, Lorin M., 1995. "Paradox lost? : firm-level evidence on the returns to information systems spending," Working papers 3786-95., Massachusetts Institute of Technology (MIT), Sloan School of Management.
  12. G. Atzeni & O. Carboni, 2001. "The economic effects of information technology: firm level evidence from the italian case," Working Paper CRENoS 200114, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia.
  13. Hung-jen Wang & Peter Schmidt, 2002. "One-Step and Two-Step Estimation of the Effects of Exogenous Variables on Technical Efficiency Levels," Journal of Productivity Analysis, Springer, vol. 18(2), pages 129-144, September.
  14. Martin Neil Baily & James Manyika & Shalabh Gupta, 2013. "U.S. Productivity Growth: An Optimistic Perspective," International Productivity Monitor, Centre for the Study of Living Standards, vol. 25, pages 3-12, Spring.
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