Testing the effect of investments in IT and R&amp;D on labour productivity: New method and evidence for Indian firms

Khanna, Rupika; Sharma, Chandan

doi:10.1016/j.econlet.2018.09.003

Cited by 36 publications

(21 citation statements)

References 19 publications

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“…There are grounds to expect a positive relationship between investment in ICT assets and TFP of manufacturing plants (for a discussion on the relationship between ICT and productivity, see Brynjolfsson and Hitt, 2000; Commander et al , 2011, among others). It should be pointed out in this context that a number of studies undertaken for Indian manufacturing firms have found a positive effect of ICT investment on manufacturing sector productivity (Joseph and Abraham, 2007; Kite, 2012, 2013; Sharma and Singh, 2013; Mitra et al , 2016; and Khanna and Sharma, 2018b), conforming to the findings of the international literature on the same topic.…”

Section: Model Data and Variables And Regression Resultssupporting

confidence: 74%

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Services input and productivity in Indian manufacturing plants

Goldar

2019

IGDR

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Purpose The purpose of this paper is to analyse econometrically determinants of total factor productivity (TFP) in Indian manufacturing plants with a focus on the influence of services input on productivity. Design/methodology/approach Plant-level data drawn from Annual Survey of Industries for the years 1998-1999 to 2012-2013 are used for the estimation of TFP at plant-level by applying the Levinsohn–Petrin methodology. Econometric models are estimated to explain variations in plant-level TFP. The explanatory variables used are services input intensity (split into manufacturing services purchased and other services), the share of information communication technology (ICT) assets in total fixed capital stock, the share of contract workers in total workers and the share of imported materials out of total materials used, with plant size taken as a control variable. Model estimation is done by applying the fixed effects model. Findings Econometric results indicate that services input and ICT intensity have a significant positive effect on productivity of manufacturing plants in India. Use of imported materials raises productivity, whereas the use of contract workers in place of regular workers tends to lower productivity. The impact of imported materials on TFP of manufacturing plants seems to be relatively bigger for labour-intensive, low technology industries. Originality/value Care has been taken for TFP measurement. Analysis of the impact of services input on TFP has been undertaken for Indian manufacturing using plant-level data for the first time.

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Section: Model Data and Variables And Regression Resultssupporting

confidence: 74%

“…De and Nagaraj (2014) have used the Levinsohn–Pertin methodology based TFP estimates as the main one for their analysis, and have also made an alternate estimate based on the methodology suggested by Wooldridge (2009). Khanna and Sharma (2018b) have used the Wooldridge (2009) estimator.…”

Section: Model Data and Variables And Regression Resultsmentioning

confidence: 99%

Services input and productivity in Indian manufacturing plants

Goldar

2019

IGDR

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“…One of the fastest-growing high-tech sectors in many countries in the past few decades has been the ICT sector (Hanna, 2009). It is therefore not surprising that ICT has been proven to have a positive effect on economic growth (Khanna & Sharma, 2018;Sepehrdoust, 2018;Tolica et al, 2015). Even though many papers focus on the role of R&D and ICT separately, some authors argue that it is important to study the relationship and correlations between these two areas since they were shown to have complementary effects (Pieri et al, 2018;Khanna & Sharma, 2018;Mohnen et al, 2018).…”

Section: Literature Reviewmentioning

confidence: 99%

“…It is therefore not surprising that ICT has been proven to have a positive effect on economic growth (Khanna & Sharma, 2018;Sepehrdoust, 2018;Tolica et al, 2015). Even though many papers focus on the role of R&D and ICT separately, some authors argue that it is important to study the relationship and correlations between these two areas since they were shown to have complementary effects (Pieri et al, 2018;Khanna & Sharma, 2018;Mohnen et al, 2018). Many authors studying the factors affecting the growth of ICT sector agree that one of the key driving forces of ICT industry is R&D and innovation (Canarella & Miller, 2018;Lindmark et al, 2010;Manjón et al, 2016;Monge-Gonzálet & Hewitt, 2010;Stejskal et al, 2018;Tolica et al, 2015).…”

Section: Literature Reviewmentioning

confidence: 99%

R&D Investments in the European ICT sector: Implications for Business Performance

Huňady

Pisár

Ďurčeková

2020

Business Systems Research Journal

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BackgroundA significant share of business innovation arises from information and communication (ICT) sector. Business investment into research and development (R&D) activities can be seen as an important basis for innovation, which can further lead to better economic performance. This can be especially true for the ICT sector.ObjectivesThe paper examines the share of the ICT sector on innovation and the total R&D expenditure in selected European countries. Furthermore, our aim is to test the potential positive correlation between R&D expenditure, productivity and the value added in the sector.Methods/ApproachThe goals of the paper has been tested by empirical data analysis using the pane regression analysis. We examined panel data for 24 European countries in the 2008-2016 period.ResultsThe highest share of business R&D expenditure in ICT has been captured in Nordic countries. Firms in ICT appear to be innovative above the average and represent a significant share in the total business R&D expenditure.ConclusionsWe found a positive correlation between R&D expenditure and both value-added and apparent labour productivity in the ICT sector. We believe that this could be to some extent attributed to the innovation of products and processes. Hence, the government support in the form of R&D tax incentives can be also beneficial for the economic performance of ICT firms.

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“…17. Alternatively, we could also have used the Unit Labor Costs (ULC), value added per worker, or the Ackerberg, Caves, and Frazer (2015) TFP method, as used recently by for instance Brandt et al (2017) and Khanna and Sharma (2018). The correlations between the LP measure of TFP and the alternative measures are fairly high (0.89 in the case of the Ackerberg et al TFP measure, 0.88 in the case of ULC).…”

Section: Notesmentioning

confidence: 99%

Firm heterogeneity and exports in the Netherlands: Identifying export potential beyond firm productivity

Brakman¹,

Garretsen²,

Maarseveen

et al. 2019

The Journal of International Trade & Economic Development

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According to the Melitz [2003. 'The Impact of Trade on Intra-Industry Reallocations and Aggregate Industry Productivity.' Econometrica 71: 1695-1725] model, potential exporters have to be sufficiently productive to overcome the entry costs of foreign markets. Once firms pass this productivity threshold, they all export. However, empirical evidence indicates that a substantial share of highly productive top-performing firms does not export. In this paper, we focus specifically on this group of high-performing non-exporters and identify the factors that prevent them from successfully exporting. We employ a large Dutch administrative dataset containing both small and large firms in services and manufacturing for the period 2010-2016. Our main findings are twofold. First, controlling for high productivity identifies other factors that need to be fulfilled for exporting firms. Firm size, import status, and foreign ownership are important determinants of a firm's future export activity. Second, firm location is crucial. A location in more peripheral areas increases the probability that high-productive firms do not export, whereas a location close to the border increases export probabilities.

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Testing the effect of investments in IT and R&D on labour productivity: New method and evidence for Indian firms

Cited by 36 publications

References 19 publications

Services input and productivity in Indian manufacturing plants

Services input and productivity in Indian manufacturing plants

R&D Investments in the European ICT sector: Implications for Business Performance

Firm heterogeneity and exports in the Netherlands: Identifying export potential beyond firm productivity

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