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Impact of information technology on firm performance: New evidence from Indian manufacturing

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  • Khanna, Rupika
  • Sharma, Chandan

Abstract

India has risen to prominence as a global supplier of information technology (IT). However, the extent to which IT benefits Indian manufacturing is less well known. We assess the effects of IT capital on firm's growth from 1998 to 2016. We make two significant contributions: (i) we make comparisons between different periods, high-IT intensive and low-IT intensive sectors and 14 manufacturing industries at a disaggregated-level, (ii) to overcome the problems of simultaneity in production function estimation, we employ a recently developed semi-parametric technique. Our findings indicate that (i) IT as a production input contributes significantly to firm's output, yet the estimated effects vary significantly by time-period and industry, (ii) the impact of IT is maximum between 2000 and 2009, and then begins to weaken between 2010 and 2016, (iii) IT elasticities in high- and low-technology sectors appear to be converging, particularly between 2010 and 2016.

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  • Khanna, Rupika & Sharma, Chandan, 2022. "Impact of information technology on firm performance: New evidence from Indian manufacturing," Information Economics and Policy, Elsevier, vol. 60(C).
    • Handle: RePEc:eee:iepoli:v:60:y:2022:i:c:s0167624522000257
    DOI: 10.1016/j.infoecopol.2022.100986
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    More about this item

    Keywords

    Information technology; Manufacturing; Firm-level; Endogeneity; Control function;
    All these keywords.

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights

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