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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 (2017-2023 papers hosted by The National Institute of Economic and Social Research) ESCoE DP-2022-06, Economic Statistics Centre of Excellence (ESCoE).
    • Handle: RePEc:nsr:escoed:escoe-dp-2022-06
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    References listed on IDEAS

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    Cited by:

    1. Coyle, Diane & Hampton, Lucy, 2024. "21st century progress in computing," Telecommunications Policy, Elsevier, vol. 48(1).
    2. Coyle, Diane & McHale, John & Bournakis, Ioannis & Mei, Jen-Chung, 2026. "Converging to mediocrity: Trends in firm-level markups in the United Kingdom 2008–2019," Economics Letters, Elsevier, vol. 261(C).
    3. 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.

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    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

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