ICTs and lags in technical efficiency gains. A stochastic frontier approach over a panel of Italian manufacturing firms

Castiglione, Concetta and Infante, Davide (2012): ICTs and lags in technical efficiency gains. A stochastic frontier approach over a panel of Italian manufacturing firms.

Abstract

This paper analyses the relationship between investment in Information and Communication Technologies (ICTs) and Technical Efficiency (TE). It uses a panel dataset of Italian manufacturing firms during the period 1995-2003. In contrast to much of the existing literature which focuses on the impact of ICT on labour or multifactor productivity, the paper analyses the relationship between ICT and TE using a stochastic frontier approach. Results show that ICT investment is positively associated with productivity and efficiency, but that the elasticities are lower than those associated with non-ICT capital and labour. Moreover, ICT investments have a positive effect on firm TE, and the impact of ICTs reduces firm inefficiency with a strong time lag since their adoption. Finally, the paper makes a methodological contribution by showing that a Cobb-Douglas production frontier is rejected in favour of a translog one.

• Item Type: MPRA Paper
• Language: English
• Keywords: ICT, Stochastic Frontier, Technical Efficiency, Manufacturing Firms
• Subjects: D - Microeconomics > D2 - Production and Organizations > D24 - Production ; Cost ; Capital ; Capital, Total Factor, and Multifactor Productivity ; Capacity; L - Industrial Organization > L2 - Firm Objectives, Organization, and Behavior > L25 - Firm Performance: Size, Diversification, and Scope; L - Industrial Organization > L6 - Industry Studies: Manufacturing > L60 - General; O - Economic Development, Innovation, Technological Change, and Growth > O3 - Innovation ; Research and Development ; Technological Change ; Intellectual Property Rights > O33 - Technological Change: Choices and Consequences ; Diffusion Processes

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