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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

    as
    1. Sandra E. Black & Lisa M. Lynch, 2004. "What's driving the new economy?: the benefits of workplace innovation," Economic Journal, Royal Economic Society, vol. 114(493), pages 97-116, February.
    2. Baldwin, John R. & Sabourin, David & Smith, David, 2003. "Impact of Advanced Technology Use on Firm Performance in the Canadian Food Processing Sector," Economic Analysis (EA) Research Paper Series 2003012e, Statistics Canada, Analytical Studies Branch.
    3. Lisa M. Lynch & Sandra E. Black, 1995. "Beyond the Incidence of Training: Evidence from a National Employers Survey," NBER Working Papers 5231, National Bureau of Economic Research, Inc.
    4. 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, Oxford University Press, vol. 117(1), pages 339-376.
    5. Easton, George S & Jarrell, Sherry L, 1998. "The Effects of Total Quality Management on Corporate Performance: An Empirical Investigation," The Journal of Business, University of Chicago Press, vol. 71(2), pages 253-307, April.
    6. Brynjolfsson, Erik. & Hitt, Lorin M., 1994. "Information technology as a factor of production : the role of differences among firms," Working papers 3715-94. CCSTR ; #173., Massachusetts Institute of Technology (MIT), Sloan School of Management.
    7. Sandra E. Black & Lisa M. Lynch, 2001. "How To Compete: The Impact Of Workplace Practices And Information Technology On Productivity," The Review of Economics and Statistics, MIT Press, vol. 83(3), pages 434-445, August.
    8. Lavoie, Marie & Roy, Richard & Therrien, Pierre, 2003. "A growing trend toward knowledge work in Canada," Research Policy, Elsevier, vol. 32(5), pages 827-844, May.
    9. Surendra Gera & Wulong Gu & Zhengxi Lin, 2001. "Technology and the demand for skills in Canada: an industry-level analysis," Canadian Journal of Economics, Canadian Economics Association, vol. 34(1), pages 132-148, February.
    10. Erik Brynjolfsson & Lorin M. Hitt, 2000. "Beyond Computation: Information Technology, Organizational Transformation and Business Performance," Journal of Economic Perspectives, American Economic Association, vol. 14(4), pages 23-48, Fall.
    11. Ichniowski, Casey & Shaw, Kathryn & Prennushi, Giovanna, 1997. "The Effects of Human Resource Management Practices on Productivity: A Study of Steel Finishing Lines," American Economic Review, American Economic Association, vol. 87(3), pages 291-313, June.
    12. David Neumark & Peter Cappelli, 1999. "Do "High Performance" Work Practices Improve Establishment-Level Outcomes?," NBER Working Papers 7374, National Bureau of Economic Research, Inc.
    13. Milgrom, Paul & Roberts, John, 1990. "The Economics of Modern Manufacturing: Technology, Strategy, and Organization," American Economic Review, American Economic Association, vol. 80(3), pages 511-528, June.
    14. Erik Brynjolfsson & Lorin Hitt, 1996. "Paradox Lost? Firm-Level Evidence on the Returns to Information Systems Spending," Management Science, INFORMS, vol. 42(4), pages 541-558, April.
    15. Frank R. Lichtenberg, 1993. "The Output Contributions of Computer Equipment and Personnel: A Firm- Level Analysis," NBER Working Papers 4540, National Bureau of Economic Research, Inc.
    16. Baldwin, John R. & Diverty, Brent & Sabourin, David, 1995. "Technology Use and Industrial Transformation: Empirical Perspectives," Analytical Studies Branch Research Paper Series 1995075e, Statistics Canada, Analytical Studies Branch.
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    Citations

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    Cited by:

    1. 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.
    2. 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.
    3. Petr Hanel, 2007. "Productivity and innovation: an overview of the issues," Cahiers de recherche 07-22, Departement d'Economique de l'École de gestion à l'Université de Sherbrooke.
    4. Dachs, Bernhard & Hud, Martin & Koehler, Christian & Peters, Bettina, 2016. "Employment effects of innovations over the business cycle: Firm-level evidence from European countries," ZEW Discussion Papers 16-076, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    5. 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.
    6. Rinaldo Evangelista & Maria Savona, 2010. "Innovation and Employment in Services," Chapters,in: The Handbook of Innovation and Services, chapter 16 Edward Elgar Publishing.
    7. 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.
    8. 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.
    9. 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.
    10. 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.
    11. repec:ehu:cuader:21770 is not listed on IDEAS
    12. 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.
    13. 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.

    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;

    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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