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ICT, corporate restructuring and productivity

Author Info

  • Laura Abramovsky

    ()

    (Institute for Fiscal Studies and Institute for Fiscal Studies)

  • Rachel Griffith

    ()

    (Institute for Fiscal Studies and IFS and Manchester)

Abstract

Stronger productivity growth in the US than the EU over the late 1990s is widely attributed to faster, more widespread adoption of information and communication technology (ICT). The literature has emphasised complementarities in production between ICT and internal restructuring as an important mechanism. We investigate the idea that increased use of ICT has facilitated outsourcing of business services, and that these are complementary activities in production because they allow firms to focus on their core competencies. This is consistent with evidence from the business literature and aggregate trends, and we show evidence from microdata that is consistent with this idea.

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Paper provided by Institute for Fiscal Studies in its series IFS Working Papers with number W09/10.

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Date of creation: 17 Apr 2009
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Handle: RePEc:ifs:ifsewp:09/10
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Find related papers by JEL classification:

  • D2 - Microeconomics - - Production and Organizations
  • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights
  • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity

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  1. Pol Antràs, 2003. "Firms, Contracts, and Trade Structure," The Quarterly Journal of Economics, Oxford University Press, vol. 118(4), pages 1375-1418.
  2. Marin, Dalia & Verdier, Thierry, 2002. "Globalization and the 'New Enterprise'," Discussion Papers in Economics 11, University of Munich, Department of Economics.
  3. Richard Blundell & Stephen Bond, 2000. "GMM Estimation with persistent panel data: an application to production functions," Econometric Reviews, Taylor & Francis Journals, vol. 19(3), pages 321-340.
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  7. Ackerberg, Daniel & Lanier Benkard, C. & Berry, Steven & Pakes, Ariel, 2007. "Econometric Tools for Analyzing Market Outcomes," Handbook of Econometrics, in: J.J. Heckman & E.E. Leamer (ed.), Handbook of Econometrics, edition 1, volume 6, chapter 63 Elsevier.
  8. Dale W. Jorgenson, 2001. "Information Technology and the U.S. Economy," American Economic Review, American Economic Association, vol. 91(1), pages 1-32, March.
  9. Sawyer, Malcolm (ed.), 2004. "The UK Economy," OUP Catalogue, Oxford University Press, edition 16, number 9780199266517, December.
  10. Daron Acemoglu & Philippe Aghion & Rachel Griffith & Fabrizio Zilibotti, 2007. "Vertical Integration and Technology: Theory and Evidence," IEW - Working Papers 342, Institute for Empirical Research in Economics - University of Zurich.
  11. Stephen Bond & Måns Söderbom, 2005. "Adjustment Costs and the Identification of Cobb Douglas Production Functions," Economics Papers 2005-W04, Economics Group, Nuffield College, University of Oxford.
  12. Rachel Griffith & Helen Simpson, 2001. "Characteristics of foreign-owned firms in British manufacturing," IFS Working Papers W01/10, Institute for Fiscal Studies.
  13. Holger Görg & Aoife Hanley & Eric Strobl, 2008. "Productivity effects of international outsourcing: evidence from plant-level data," Canadian Journal of Economics, Canadian Economics Association, vol. 41(2), pages 670-688, May.
  14. Eve Caroli & John Van Reenen, 2001. "Skill-Biased Organizational Change? Evidence from A Panel of British and French Establishments," The Quarterly Journal of Economics, Oxford University Press, vol. 116(4), pages 1449-1492.
  15. Susan Athey & Scott Stern, 1998. "An Empirical Framework for Testing Theories About Complimentarity in Organizational Design," NBER Working Papers 6600, National Bureau of Economic Research, Inc.
  16. Lourens Broersma & Bart Van Ark, 2007. "Ict, Business Services And Labour Productivity Growth," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 16(6), pages 433-449.
  17. Milgrom, Paul & Roberts, John, 1990. "The Economics of Modern Manufacturing: Technology, Strategy, and Organization," American Economic Review, American Economic Association, vol. 80(3), pages 511-28, June.
  18. Susan Athey & Armin Schmutzler, 1995. "Product and Process Flexibility in an Innovative Environment," RAND Journal of Economics, The RAND Corporation, vol. 26(4), pages 557-574, Winter.
  19. Bart van Ark & Robert Inklaar & Robert H. McGuckin, 2002. "'Changing Gear' - Productivity, ICT and Services Industries: Europe and the United States," Economics Program Working Papers 02-02, The Conference Board, Economics Program.
  20. George P. Baker & Thomas N. Hubbard, 2002. "Make Versus Buy in Trucking: Asset Ownership, Job Design and Information," NBER Working Papers 8727, National Bureau of Economic Research, Inc.
  21. Ackerberg, Daniel & Caves, Kevin & Frazer, Garth, 2006. "Structural identification of production functions," MPRA Paper 38349, University Library of Munich, Germany.
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Cited by:

  1. Andreas Koch & Elena Biewen, 2012. "Are Firms in Business Groups More Productive? An empirical analysis based on German micro-level data with a special emphasis on the roles of regional and sectoral diversity," ERSA conference papers ersa12p795, European Regional Science Association.
  2. Bloom, Nicholas & Sadun, Raffaella & Van Reenen, John, 2007. "Americans Do I.T. Better: US Multinationals and the Productivity Miracle," CEPR Discussion Papers 6291, C.E.P.R. Discussion Papers.
  3. Holger Görg & Aoife Hanley & Ingrid Ott, 2015. "Outsourcing Foreign Services and the Internet: Evidence from Firm Level Data," The Economic and Social Review, Economic and Social Studies, vol. 46(3), pages 367-387.

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