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Impact of the Adoption of Advanced Information and Communication Technologies on Firm Performance in the Canadian Manufacturing Sector

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  • Baldwin, John R.
  • Sabourin, David

Abstract

This paper investigates the evolution of the industrial structure in the Canadian manufacturing sector and its relationship to technological change by examining the take-up of advanced technologies and how it is related to the stochastic growth process in the plant population. Its framework is grounded in the view that growth is a stochastic process that involves learning. Experimentation with new technologies rewards some firms with superior growth and profitability. Examining how growth is associated with the choice of different technology strategies indicates which of these is being rewarded. The evolution of this process is studied by examining the relationship between the uptake of advanced technologies and the performance of plants in the manufacturing sector. This is done by using cross-sectional data on advanced technology use and by combining it with longitudinal panel data on plant performance. In particular, the paper examines the relationship between the use of information and communications technology (ICT) and the growth in a plant's market share and its relative productivity. The study finds that a considerable amount of market share is transferred from declining firms to growing firms over a decade. At the same time, the growers increase their productivity relative to the losers. Those technology users that were using communications technologies or that combined technologies from different classes increased their relative productivity the most. In turn, gains in relative productivity were accompanied by gains in market share. Other factors that were associated with gains in market share were the presence of R&D facilities and other innovative activities.

Suggested Citation

  • Baldwin, John R. & Sabourin, David, 2001. "Impact of the Adoption of Advanced Information and Communication Technologies on Firm Performance in the Canadian Manufacturing Sector," Analytical Studies Branch Research Paper Series 2001174e, Statistics Canada, Analytical Studies Branch.
  • Handle: RePEc:stc:stcp3e:2001174e
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    References listed on IDEAS

    as
    1. Baldwin, John R. & Dhaliwal, Naginder, 2000. "Labour Productivity Differences Between Domestic and Foreign-controlled Establishments in the Canadian Manufacturing Sector," Analytical Studies Branch Research Paper Series 2000118e, Statistics Canada, Analytical Studies Branch.
    2. ten Raa, Thijs & Wolff, Edward N., 2000. "Engines of growth in the US economy," Structural Change and Economic Dynamics, Elsevier, vol. 11(4), pages 473-489, December.
    3. Baldwin, John R. & Sabourin, David & West, Donald, 1999. "Advanced Technology in the Canadian Food Industry," Advanced Technology in the Canadian Food Industry, Statistics Canada, Economic Analysis Division, number stcb4e.
    4. Stoneman, Paul & Kwon, Myung Joong, 1996. "Technology Adoption and Firm Profitability," Economic Journal, Royal Economic Society, vol. 106(437), pages 952-962, July.
    5. J. Bradford Jensen & Robert H. McGuckin & Kevin J. Stiroh, 2001. "The Impact Of Vintage And Survival On Productivity: Evidence From Cohorts Of U.S. Manufacturing Plants," The Review of Economics and Statistics, MIT Press, vol. 83(2), pages 323-332, May.
    6. Dunne, Timothy & Schmitz, James A, Jr, 1995. "Wages, Employment Structure and Employer Size-Wage Premia: Their Relationship to Advanced-Technology Usage at US Manufacturing Establishments," Economica, London School of Economics and Political Science, vol. 62(245), pages 89-107, February.
    7. Baldwin, John & Lin, Zhengxi, 2002. "Impediments to advanced technology adoption for Canadian manufacturers," Research Policy, Elsevier, vol. 31(1), pages 1-18, January.
    8. Mark Doms & Timothy Dunne & Kenneth R. Troske, 1997. "Workers, Wages, and Technology," The Quarterly Journal of Economics, Oxford University Press, vol. 112(1), pages 253-290.
    9. Baldwin, John R. & Johnson, Joanne, 1995. "Business Strategies in Innovative and Non-innovative Firms in Canada," Analytical Studies Branch Research Paper Series 1995073e, Statistics Canada, Analytical Studies Branch.
    10. Hall, Bronwyn H. & Mairesse, Jacques, 1995. "Exploring the relationship between R&D and productivity in French manufacturing firms," Journal of Econometrics, Elsevier, vol. 65(1), pages 263-293, January.
    11. Laura Power, 1998. "The Missing Link: Technology, Investment, And Productivity," The Review of Economics and Statistics, MIT Press, vol. 80(2), pages 300-313, May.
    12. Baldwin, John R. & Diverty, Brent, 1995. "Advanced Technology Use in Canadian Manufacturing Establishments," Analytical Studies Branch Research Paper Series 1995085e, Statistics Canada, Analytical Studies Branch.
    13. Baldwin,John R. & Gorecki,Paul, 1998. "The Dynamics of Industrial Competition," Cambridge Books, Cambridge University Press, number 9780521633574, December.
      • Baldwin,John R. & Gorecki,Paul With contributions by-Name:Caves,Richard E. With contributions by-Name:Dunne,Tim With contributions by-Name:Haltiwanger,John, 1995. "The Dynamics of Industrial Competition," Cambridge Books, Cambridge University Press, number 9780521465618, March.
    14. Geroski, Paul A, 1989. "Entry, Innovation and Productivity Growth," The Review of Economics and Statistics, MIT Press, vol. 71(4), pages 572-578, November.
    15. Baldwin, John R., 1996. "Productivity Growth, Plant Turnover and Restructuring in the Canadian Manufacturing Sector," Analytical Studies Branch Research Paper Series 1995087e, Statistics Canada, Analytical Studies Branch.
    16. Baldwin, John R. & Brown, W. Mark & Vinodrai, Tara, 2001. "Dynamics of the Canadian Manufacturing Sector in Metropolitan and Rural Regions," Analytical Studies Branch Research Paper Series 2001169e, Statistics Canada, Analytical Studies Branch.
    17. Baldwin, John R., 1995. "Innovation: The Key to Success in Small Firms," Analytical Studies Branch Research Paper Series 1995076e, Statistics Canada, Analytical Studies Branch.
    18. Baldwin, John R. & Harchaoui, Tarek, 2002. "Productivity Growth in Canada," Productivity Growth in Canada, Statistics Canada, Economic Analysis Division, number stcb6e, July.
    19. Doms, Mark & Dunne, Timothy & Roberts, Mark J., 1995. "The role of technology use in the survival and growth of manufacturing plants," International Journal of Industrial Organization, Elsevier, vol. 13(4), pages 523-542, December.
    20. Baldwin, John R. & Sabourin, David, 1999. "Innovative Activity in Canadian Food Processing Establishments: the Importance of Engineering Practices," Analytical Studies Branch Research Paper Series 1999101e, Statistics Canada, Analytical Studies Branch.
    21. Baldwin, John R., 2000. "Innovation and Training in New Firms," Analytical Studies Branch Research Paper Series 2000123e, Statistics Canada, Analytical Studies Branch.
    22. Baldwin, John R. & Yates, Janice, 1999. "Innovation, Training and Success," Analytical Studies Branch Research Paper Series 1999137e, Statistics Canada, Analytical Studies Branch.
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    Citations

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    Cited by:

    1. Fındık, Derya & Tansel, Aysit, 2013. "Resources on the stage: a firm level analysis of the ict adoption in Turkey," MPRA Paper 65956, University Library of Munich, Germany, revised 05 Aug 2014.
    2. Rim Ben Ayed Mouelhi, 2009. "Impact Of The Adoption Of Information And Communication Technologies On Firm Efficiency In The Tunisian Manufacturing Sector," Working Papers 506, Economic Research Forum, revised Oct 2009.
    3. Baldwin, John R. & Gu, Wulong, 2005. "Global Links: Multinationals, Foreign Ownership and Productivity Growth in Canadian Manufacturing," The Canadian Economy in Transition 2005009e, Statistics Canada, Economic Analysis Division.
    4. Boothby, Daniel & Dufour, Anik & Tang, Jianmin, 2010. "Technology adoption, training and productivity performance," Research Policy, Elsevier, vol. 39(5), pages 650-661, June.
    5. Julie Turcotte & Lori Whewell Rennison, 2004. "The Link between Technology Use, Human Capital, Productivity and Wages: Firm-level Evidence," International Productivity Monitor, Centre for the Study of Living Standards, vol. 9, pages 25-36, Fall.
    6. Beckstead, Desmond & Gellatly, Guy, 2004. "Are Knowledge Workers Found Only in High-technology Industries?," The Canadian Economy in Transition 2004005e, Statistics Canada, Economic Analysis Division.
    7. Baldwin, John R. & Gellatly, Guy, 2007. "Innovation Capabilities: Technology Use, Productivity Growth and Business Performance: Evidence from Canadian Technology Surveys," The Canadian Economy in Transition 2007016e, Statistics Canada, Economic Analysis Division.
    8. Harchaoui, Tarek & Tarkhani, Faouzi, 2004. "Whatever Happened to Canada-United States Economic Growth and Productivity Performance in the Information Age?," Economic Analysis (EA) Research Paper Series 2004025e, Statistics Canada, Analytical Studies Branch.
    9. repec:eee:touman:v:48:y:2015:i:c:p:188-198 is not listed on IDEAS
    10. Sang Nguyen & B.K. Atrostic, 2005. "Computer Investment, Computer Networks and Productivity," Working Papers 05-01, Center for Economic Studies, U.S. Census Bureau.
    11. 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.
    12. John R Baldwin & Ron S Jarmin & Jianmin Tang, 2002. "The Trend to Smaller Producers in Manufacturing in Canada and the U.S," Working Papers 02-06, Center for Economic Studies, U.S. Census Bureau.
    13. Baldwin, John R. & Sabourin, David, 2002. "Enhancing Food Safety and Productivity: Technology Use in the Canadian Food Processing Industry," Analytical Studies Branch Research Paper Series 2002168e, Statistics Canada, Analytical Studies Branch.
    14. Baldwin, John R. & Beckstead, Desmond & Brown, W. Mark, 2003. "Hollowing-out, Trimming-down or Scaling-up? An Analysis of Head Offices in Canada, 1999 to 2002," Economic Analysis (EA) Research Paper Series 2003019e, Statistics Canada, Analytical Studies Branch.
    15. repec:idb:brikps:71298 is not listed on IDEAS
    16. Baldwin, John R. & Jarmin , Ron S. & Tang, Jianmin, 2002. "The Trend to Smaller Producers in Manufacturing: A Canada/U.S. Comparison," Economic Analysis (EA) Research Paper Series 2002003e, Statistics Canada, Analytical Studies Branch.
    17. Baldwin, John R. & Gellatly, Guy, 2006. "Innovation Capabilities: The Knowledge Capital Behind the Survival and Growth of Firms," The Canadian Economy in Transition 2006013e, Statistics Canada, Economic Analysis Division.

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    Keywords

    Business performance and ownership; Information and communications technology; Information and communications technology sector; Innovation; Science and technology;

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