The Impact of the Information and Communication Technology on Production and Total Factor Productivity of Industrial Firms

Subject Areas : Business Management

Yadollah Rajaye ^{1 *}

1 - Faculty Member (Assistant Professor), Department of Economics, Abhar Branch, Islamic Azad University, Abhar, Iran

Received: 2011-05-09 Accepted : 2012-03-08 Published : 2012-05-21

Keywords: Total factor productivity, Industry, Panel Data, information and communication technology, Growth accounting,

Abstract :

This article has investigated the effect of information and communication technology (ICT) on the production and total factor productivity by using the analysis of the panel data. To perform this, the analysis was done through the application of the statistical data received from the industrial firms related to Iran's StatisticsCenter using a panel data model to the firm level, based on the latest published information (2006-2007). The study has been conducted with two approaches. In the first one, the effects of information and communication technology on the production through estimating the expanded function of Cobb Douglas, regarding the largeness of the agency and the type of the industry have been noted. Six measuring characteristics related to the amount of implementing information and communication technology in Iranian Industry, within the scope of agencies, have been taken into account. In the second approach, the extended production function of Cobb Douglas has been estimated for the two groups of agencies. The groups included those which applied computers in doing the tasks and those which did not. Then, the amounts of the productivity of total production factors were compared. Accordingly, the effect of ICT on production in the first approach, and its effect on total factor productivity in the second one have been considered. The results indicate that most ICT characteristics confirm the positive effects of the information and communication technology on the productivity to the firm level. Also, the results of the second approach validate the undeniable impact of the so-called technologies on the total factor productivity.  

References:

Atrostic BK and Nguyen SV (2002). Computer Networks and US Manufacturing Plant Productivity: New Evidence from the CNUS Data. Center for Economic Studies, US Census Bureau. Washington, DC.

Bender d. (1986) " Financial Impact Of Information Processing", journal of management information system, 3(2)

Brrynjolfsson, E., L. M. Hitt. (1996); "Paradox Lost? Firm Level Evidence On The Returns To Information Technology Spending", management science, 42 (4)

Brynjolfsson E and Hitt LM (2002). Computing productivity: firm-level evidence. Review of Economics and Statistics 85(4): 793 – 808

Clayton, Crisculo, goodridge and waldron.(2003), Enterprise       E-commerce; Measurement and impact, Office National Statistics

Criscuolo C and Waldron K (2003), E-Commerce and Productivity. Economic Trends 600, UK Office for National Statistics

Dedrick J., Vijay G., Kenneth L.(2003); "Information technology and economic performance: a critical review of the empirical evidence", ACM Computing surveys, 35(1), March, PP. 1-28

Haacker, M And Morsink, J. (2002), "You Say You Want A Revolution Information Technology And Growth" IMF WP 02/70

Hagén H-O and Zeed J (2005), Does ICT use matter for firm productivity. Yearbook on Productivity 2005, Statistics Sweden.

Jorgenson D.W., Motohashi, K.(2005),"Information Technology And The Japanese Economy", NBER Working Paper

Jorgenson, D. D., Ho, M. S. and Stiroh, K. J., (2006), "Potential Growth of the U. S. Economy: Will the Productivity Resurgence Continue?" Journal of business economics, pp. 7-16

Mahmood M. A., Man G. J.,(1993); "Measuring The Organizational Impact Of Information Technology Investment: An Exploratory Study" , journal of management information system, 10 (1), PP. 1-97

Maliranta M and Rouvinen P (2003), "Productivity effect of ICT in Finnish business." Discussion Paper No. 852, Research Institute of the Finnish Economy

Thomas Pisello, Paul Strassman, (2003);"IT Value Chain Management-Maximizing the ROI from IT Investments", the information economics press, 1st Ed.

Zachry, G. P. (1991), "Computer Data Limits Productivity Gains" , Wall street journal, November 1991

Zhu K., Kraemer K. L., (2002), "E-commerce metrics for net-enhanced organizations: assessing the value of e-commerce to firm performance in the manufacturing sector", information systems research,13(3), PP. 275-295