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

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References

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  1. Bronwyn H. Hall & Jacques Mairesse, 1992. "Exploring the Relationship Between R&D and Productivity in French Manufacturing Firms," NBER Working Papers 3956, National Bureau of Economic Research, Inc.
  2. Stephen D. Oliner & Daniel E. Sichel, 2000. "The Resurgence of Growth in the Late 1990s: Is Information Technology the Story?," Journal of Economic Perspectives, American Economic Association, vol. 14(4), pages 3-22, Fall.
  3. 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.
  4. 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, Centre for the Study of Living Standards, vol. 25, pages 3-12, Spring.
  5. L. Becchetti & David Bedoya & L. Paganetto, 2003. "ICT Investment, Productivity and Efficiency: Evidence at Firm Level Using a Stochastic Frontier Approach," Journal of Productivity Analysis, Springer, Springer, vol. 20(2), pages 143-167, September.
  6. Gaaitzen J. De Vries & Michael Koetter, 2011. "ICT Adoption and Heterogeneity in Production Technologies: Evidence for Chilean Retailers," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 73(4), pages 539-555, 08.
  7. 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.
  8. Tommaso Ciarli & Roberta Rabellotti, 2007. "ICT in Industrial Districts: An Empirical Analysis on Adoption, Use and Impact," Industry and Innovation, Taylor & Francis Journals, Taylor & Francis Journals, vol. 14(3), pages 277-303.
  9. 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.
  10. Sergio Destefanis & Vania Sena, 2004. "Patterns Of Corporate Governance And Technical Efficiency In Italian Manufacturing," Finance, EconWPA 0405026, EconWPA.
  11. Maria Laura Parisi & Fabio Schiantarelli & Alessandro Sembenelli, 2002. "Productivity, Innovation Creation and Absorption, and R&D: Micro Evidence for Italy," Boston College Working Papers in Economics, Boston College Department of Economics 526, Boston College Department of Economics.
  12. 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, Springer, vol. 18(2), pages 129-144, September.
  13. Timothy F. Bresnahan & Erik Brynjolfsson & Lorin M. Hitt, 2002. "Information Technology, Workplace Organization, And The Demand For Skilled Labor: Firm-Level Evidence," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 117(1), pages 339-376, February.
  14. 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, Centre for the Study of Living Standards, vol. 25, pages 13-19, Spring.
  15. David M. Byrne & Stephen D. Oliner & Daniel E. Sichel, 2013. "Is the Information Technology Revolution Over?," International Productivity Monitor, Centre for the Study of Living Standards, Centre for the Study of Living Standards, vol. 25, pages 20-36, Spring.
  16. Matteo Bugamelli & Patrizio Pagano, 2004. "Barriers to investment in ICT," Applied Economics, Taylor & Francis Journals, Taylor & Francis Journals, vol. 36(20), pages 2275-2286.
  17. Concetta Castiglione, 2012. "Technical efficiency and ICT investment in Italian manufacturing firms," Applied Economics, Taylor & Francis Journals, Taylor & Francis Journals, vol. 44(14), pages 1749-1763, May.
  18. Chen, Wen-Chih & McGinnis, Leon F., 2007. "Reconciling ratio analysis and DEA as performance assessment tools," European Journal of Operational Research, Elsevier, Elsevier, vol. 178(1), pages 277-291, April.
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