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ICT, R&D and Organizational Innovation: Exploring Complementarities in Investment and Production

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  • Pierre Mohnen
  • Michael Polder
  • George van Leeuwen

Abstract

This paper examines whether there are complementarities between investments in ICT, R&D and organizational innovation, and the effects of different investment profiles on total factor productivity growth on Dutch firm-level data. We estimate an integrated model of investment profile adoption and total factor productivity growth. We find that the three investment decisions are complementary, in the sense that investing in one increases the probability of investing in another one because joint investments lead to higher TFP growth than individual investments. ICT earns on average an expected rate of return of 9.7%, followed by 6% to 7% on organizational innovation and a modest 1.4% to 1.8% on R&D in services and manufacturing respectively.

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  • Pierre Mohnen & Michael Polder & George van Leeuwen, 2018. "ICT, R&D and Organizational Innovation: Exploring Complementarities in Investment and Production," NBER Working Papers 25044, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:25044
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    2. Robert Anderton & Vasco Botelho & Paul Reimers, 2023. "Digitalisation and productivity: gamechanger or sideshow?," Discussion Papers 2023-05, University of Nottingham, GEP.
    3. James Harrigan & Ariell Reshef & Farid Toubal, 2018. "Techies, Trade, and Skill-Biased Productivity," NBER Working Papers 25295, National Bureau of Economic Research, Inc.
    4. Zoran Aralica & Bruno Skrinjaric, 2021. "Adoption of digital and ICT technologies and firms’ productivity," Working Papers 2102, The Institute of Economics, Zagreb.
    5. Andersson, Martin & Kusetogullari, Anna & Wernberg, Joakim, 2021. "Software development and innovation: Exploring the software shift in innovation in Swedish firms," Technological Forecasting and Social Change, Elsevier, vol. 167(C).
    6. Gaaitzen de Vries & Aobo Jiang & Oscar Lemmers & Shang‐Jin Wei, 2021. "Firm productivity and functional specialisation," The World Economy, Wiley Blackwell, vol. 44(5), pages 1232-1260, May.
    7. Li, Dongkun & Chen, Yufeng & Miao, Jiafeng, 2022. "Does ICT create a new driving force for manufacturing?—Evidence from Chinese manufacturing firms," Telecommunications Policy, Elsevier, vol. 46(1).
    8. Khanna, Rupika & Sharma, Chandan, 2024. "Beyond information technology and productivity paradox: Analysing the channels of impact at the firm-level," Technological Forecasting and Social Change, Elsevier, vol. 203(C).
    9. Marie Le Mouel & Alexander Schiersch, 2020. "Knowledge-Based Capital and Productivity Divergence," Discussion Papers of DIW Berlin 1868, DIW Berlin, German Institute for Economic Research.
    10. Nathalie Greenan & Silvia Napolitano & Imad El Hamma, 2022. "Technologies numériques, capacité d'apprentissage de l'organisation et l'innovation : résultats empiriques à l'échelle de l'UE à partir d'un ensemble de données combinées," Working Papers halshs-03941324, HAL.
    11. Chen, Chuanglian & Wang, Shudan & Yao, Shujie & Lin, Yuting, 2023. "Does digital transformation increase the labor income share? From a perspective of resources reallocation," Economic Modelling, Elsevier, vol. 128(C).
    12. Nathalie Greenan & Silvia Napolitano, 2024. "Digital technologies, learning capacity of the organization and innovation: EU-wide empirical evidence from a combined dataset," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 33(3), pages 634-669.
    13. Mattia Di Ubaldo & Iulia Siedschlag, 2021. "Investment in Knowledge‐Based Capital and Productivity: Firm‐Level Evidence from a Small Open Economy," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 67(2), pages 363-393, June.
    14. Gaglio, Cyrielle & Kraemer-Mbula, Erika & Lorenz, Edward, 2022. "The effects of digital transformation on innovation and productivity: Firm-level evidence of South African manufacturing micro and small enterprises," Technological Forecasting and Social Change, Elsevier, vol. 182(C).
    15. Audretsch, David B. & Belitski, Maksim, 2020. "The role of R&D and knowledge spillovers in innovation and productivity," European Economic Review, Elsevier, vol. 123(C).

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    JEL classification:

    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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