IDEAS home Printed from https://ideas.repec.org/p/nsr/escoed/escoe-dp-2022-06.html
   My bibliography  Save this paper

Are digital-using UK firms more productive?

Author

Listed:
  • Diane Coyle
  • Kieran Lind
  • David Nguyen
  • Manuel Tong

Abstract

One possible explanation for the productivity slowdown in advanced economies coinciding with widespread digital adoption is that firms need time to change organisational structures or processes to use the new technologies effectively. Using a unique UK firm-level data set, we explore the links between a large set of digital inputs and investments and productivity. We found that large firms are more digital-intensive than small ones and that digital adopters do have higher productivity than non-adopters, but the nature of the digital variables matters. Those reflecting in-house capabilities are positively related to firm-level total factor productivity (TFP) while those indicating bought-in ones are negatively related. This finding that firms' capabilities matter for the impact of digital adoption on productivity takes advantage of the wide range of digital variables we were able to use, and points to the need for future research on the role of digital technology in driving productivity to take account of organisational capabilities.

Suggested Citation

  • Diane Coyle & Kieran Lind & David Nguyen & Manuel Tong, 2022. "Are digital-using UK firms more productive?," Economic Statistics Centre of Excellence (ESCoE) Discussion Papers ESCoE DP-2022-06, Economic Statistics Centre of Excellence (ESCoE).
    • Handle: RePEc:nsr:escoed:escoe-dp-2022-06
    as

    Download full text from publisher

    File URL: https://escoe-website.s3.amazonaws.com/wp-content/uploads/2022/03/10100111/ESCoE-DP-2022-06.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Erik Brynjolfsson & Daniel Rock & Chad Syverson, 2021. "The Productivity J-Curve: How Intangibles Complement General Purpose Technologies," American Economic Journal: Macroeconomics, American Economic Association, vol. 13(1), pages 333-372, January.
    2. Diane Coyle & David Nguyen, 2018. "Cloud Computing and National Accounting," Economic Statistics Centre of Excellence (ESCoE) Discussion Papers ESCoE DP-2018-19, Economic Statistics Centre of Excellence (ESCoE).
    3. Benjamin F. Jones & Lawrence H. Summers, 2020. "A Calculation of the Social Returns to Innovation," NBER Chapters, in: Innovation and Public Policy, pages 13-59, National Bureau of Economic Research, Inc.
    4. 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.
    5. Oliver E. Williamson, 2000. "The New Institutional Economics: Taking Stock, Looking Ahead," Journal of Economic Literature, American Economic Association, vol. 38(3), pages 595-613, September.
    6. Cathles, Alison & Nayyar, Gaurav & Rückert, Désirée, 2020. "Digital technologies and firm performance: Evidence from Europe," EIB Working Papers 2020/06, European Investment Bank (EIB).
    7. David, Paul A, 1990. "The Dynamo and the Computer: An Historical Perspective on the Modern Productivity Paradox," American Economic Review, American Economic Association, vol. 80(2), pages 355-361, May.
    8. Moses Abramovitz, 1956. "Resource and Output Trends in the United States since 1870," NBER Books, National Bureau of Economic Research, Inc, number abra56-1, March.
    9. James Levinsohn & Amil Petrin, 2003. "Estimating Production Functions Using Inputs to Control for Unobservables," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 70(2), pages 317-341.
    10. Wooldridge, Jeffrey M., 2009. "On estimating firm-level production functions using proxy variables to control for unobservables," Economics Letters, Elsevier, vol. 104(3), pages 112-114, September.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Diane Coyle & John McHale & Ioannis Bournakis & Jen-Chung Mei, 2023. "Recent Trends in Firm-Level Total Factor Productivity in the United Kingdom: New Measures, New Puzzles," Working Papers 036, The Productivity Institute.
    2. Diane Coyle & John McHale & Ioannis Bournakis & Jen-Chung Mei, 2024. "Converging to Mediocrity: Trends in Firm-Level Markups in the United Kingdom 2008-2019," Working Papers 047, The Productivity Institute.
    3. Coyle, Diane & Hampton, Lucy, 2024. "21st century progress in computing," Telecommunications Policy, Elsevier, vol. 48(1).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Segundo Camino‐Mogro & Natalia Bermudez‐Barrezueta, 2021. "Productivity determinants in the construction sector in emerging country: New evidence from Ecuadorian firms," Review of Development Economics, Wiley Blackwell, vol. 25(4), pages 2391-2413, November.
    2. Yılmaz Kılıçaslan & Robin C. Sickles & Aliye Atay Kayış & Yeşim Üçdoğruk Gürel, 2017. "Impact of ICT on the productivity of the firm: evidence from Turkish manufacturing," Journal of Productivity Analysis, Springer, vol. 47(3), pages 277-289, June.
    3. Geoffrey Barrows & Hélène Ollivier & Ariell Reshef, 2023. "Production Function Estimation with Multi-Destination Firms," CESifo Working Paper Series 10716, CESifo.
    4. Amoroso, S., 2013. "Heterogeneity of innovative, collaborative, and productive firm-level processes," Other publications TiSEM f5784a49-7053-401d-855d-1, Tilburg University, School of Economics and Management.
    5. Jan De Loecker & Frederic Warzynski, 2012. "Markups and Firm-Level Export Status," American Economic Review, American Economic Association, vol. 102(6), pages 2437-2471, October.
    6. Simon Pröll & Giannis Karagiannis & Klaus Salhofer, 2019. "Advertising and Markups: The Case of the German Brewing Industry," Working Papers 732019, University of Natural Resources and Life Sciences, Vienna, Department of Economics and Social Sciences, Institute for Sustainable Economic Development.
    7. David Martín-Barroso & Juan A. Núñez & Francisco J. Velázquez, 2013. "The Effect On Firms' Productivity Of Accessibility. The Spanish Manufacturing Sector," ERSA conference papers ersa13p1123, European Regional Science Association.
    8. Florin Maican & Matilda Orth, 2017. "Productivity Dynamics and the Role of ‘Big-Box’ Entrants in Retailing," Journal of Industrial Economics, Wiley Blackwell, vol. 65(2), pages 397-438, June.
    9. Victor Aguirregabiria & Margaret Slade, 2017. "Empirical models of firms and industries," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 50(5), pages 1445-1488, December.
    10. Trax, Michaela & Brunow, Stephan & Suedekum, Jens, 2015. "Cultural diversity and plant-level productivity," Regional Science and Urban Economics, Elsevier, vol. 53(C), pages 85-96.
    11. Tsionas, Mike & Patel, Pankaj C. & Guedes, Maria João, 2022. "Endogenous efficiency of the dynamic profit maximization in the intertemporal production models of venture behavior," International Journal of Production Economics, Elsevier, vol. 246(C).
    12. Dobbelaere, Sabien & Kiyota, Kozo & Mairesse, Jacques, 2015. "Product and labor market imperfections and scale economies: Micro-evidence on France, Japan and the Netherlands," Journal of Comparative Economics, Elsevier, vol. 43(2), pages 290-322.
    13. Ian Goldin & Pantelis Koutroumpis & François Lafond & Julian Winkler, 2024. "Why Is Productivity Slowing Down?," Journal of Economic Literature, American Economic Association, vol. 62(1), pages 196-268, March.
    14. Peneder, Michael & Rammer, Christian (ed.), 2018. "Measuring Competitiveness," ZEW Expertises, ZEW - Leibniz Centre for European Economic Research, number 181906, February.
    15. Kanang Amos Akims & Perez Ayieko Onono & Dianah Mukwate Ngui, . "Trade Liberalization and Productivity in the Nigerian Manufacturing Sector," Journal of Economic and Sustainable Growth 3, Office Of The Chief Economist, Development Bank of Nigeria.
    16. Richard Fabling & David C Maré, 2015. "Production function estimation using New Zealand’s Longitudinal Business Database," Working Papers 15_15, Motu Economic and Public Policy Research.
    17. Alessandro Borin & Michele Mancini, 2016. "Foreign direct investment and firm performance: an empirical analysis of Italian firms," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 152(4), pages 705-732, November.
    18. Eric J. Bartelsman & Zoltan Wolf, 2017. "Measuring Productivity Dispersion," Tinbergen Institute Discussion Papers 17-033/VI, Tinbergen Institute.
    19. Nguyen, Huong, 2016. "Ease of Doing Business Reforms in Vietnam: Implications for Total Factor Productivity in Manufacturing Industries," Papers 999, World Trade Institute.
    20. Peter Bauer & Igor Fedotenkov & Aurelien Genty & Issam Hallak & Peter Harasztosi & David Martinez Turegano & David Nguyen & Nadir Preziosi & Ana Rincon-Aznar & Miguel Sanchez Martinez, 2020. "Productivity in Europe: Trends and drivers in a service-based economy," JRC Research Reports JRC119785, Joint Research Centre.

    More about this item

    Keywords

    digital; organisation; productivity;
    All these keywords.

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:nsr:escoed:escoe-dp-2022-06. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ESCoE Centre Manager (email available below). General contact details of provider: https://edirc.repec.org/data/escoeuk.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.