IDEAS home Printed from https://ideas.repec.org/a/eee/proeco/v172y2016icp43-53.html
   My bibliography  Save this article

Assessing output performance of information technology service industries: Productivity, innovation and catch-up

Author

Listed:
  • Shao, Benjamin B.M.
  • Lin, Winston T.

Abstract

The purpose of this paper is to assess the output performance of information technology (IT) service industries of twelve Organization of Economic Cooperation and Development (OECD) countries over the years from 2000 to 2011. We use Malmquist productivity index (MPI) as the performance metric and stochastic production frontier (SPF) as the measurement approach. We then decompose MPI into two ingredient components that represent technological change for innovation capability and efficiency change for catch-up effort. It is found that the IT service industries display an impressive annual rate of 7.4% for productivity growth during the study period. The parametric decomposition of MPI unveils that almost all of the productivity growth observed is enabled by technological advance made to the production process by IT service providers while efficiency change has little effect. Moreover, each country׳s IT service industry demonstrates a distinctive pattern relating to the three measures of productivity growth, technological change, and efficiency change. This observation suggests that each country׳s IT service industry possesses certain strengths that become the sources of its competitive advantage, and there are weaknesses that could be targets for performance improvement. Based on our empirical results, we offer practical implications and identify future research topics for performance evaluation of IT service and other industries.

Suggested Citation

  • Shao, Benjamin B.M. & Lin, Winston T., 2016. "Assessing output performance of information technology service industries: Productivity, innovation and catch-up," International Journal of Production Economics, Elsevier, vol. 172(C), pages 43-53.
    • Handle: RePEc:eee:proeco:v:172:y:2016:i:c:p:43-53
    DOI: 10.1016/j.ijpe.2015.10.026
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0925527315004077
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.ijpe.2015.10.026?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Andrea Bassanini & Luca Nunziata & Danielle Venn, 2009. "Job protection legislation and productivity growth in OECD countries [Appropriate growth policy: a unifying framework]," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 24(58), pages 349-402.
    2. Dale W. Jorgenson & Mun S. Ho & Kevin J. Stiroh, 2008. "A Retrospective Look at the U.S. Productivity Growth Resurgence," Journal of Economic Perspectives, American Economic Association, vol. 22(1), pages 3-24, Winter.
    3. Robert M. Solow, 1956. "A Contribution to the Theory of Economic Growth," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 70(1), pages 65-94.
    4. Wheelock, David C. & Wilson, Paul W., 2009. "Robust Nonparametric Quantile Estimation of Efficiency and Productivity Change in U.S. Commercial Banking, 1985–2004," Journal of Business & Economic Statistics, American Statistical Association, vol. 27(3), pages 354-368.
    5. Holger Görg & Aoife Hanley, 2011. "Services Outsourcing And Innovation: An Empirical Investigation," Economic Inquiry, Western Economic Association International, vol. 49(2), pages 321-333, April.
    6. Renaud Bourlès & Gilbert Cette & Jimmy Lopez & Jacques Mairesse & Giuseppe Nicoletti, 2013. "Do Product Market Regulations In Upstream Sectors Curb Productivity Growth? Panel Data Evidence For OECD Countries," The Review of Economics and Statistics, MIT Press, vol. 95(5), pages 1750-1768, December.
    7. Levy, Victor, 1981. "Total factor productivity, non-neutral technical change and economic growth : A parametric study of a developing economy," Journal of Development Economics, Elsevier, vol. 8(1), pages 93-109, February.
    8. Ceccobelli, M. & Gitto, S. & Mancuso, P., 2012. "ICT capital and labour productivity growth: A non-parametric analysis of 14 OECD countries," Telecommunications Policy, Elsevier, vol. 36(4), pages 282-292.
    9. Dale W. Jorgenson, 2001. "Information Technology and the U.S. Economy," Higher School of Economics Economic Journal Экономический журнал Высшей школы экономики, CyberLeninka;Федеральное государственное автономное образовательное учреждение высшего образования «Национальный исследовательский университет «Высшая школа экономики», vol. 5(1), pages 3-34.
    10. Malerba,Franco & Brusoni,Stefano (ed.), 2007. "Perspectives on Innovation," Cambridge Books, Cambridge University Press, number 9780521685610, September.
    11. Charnes, A. & Cooper, W. W. & Rhodes, E., 1978. "Measuring the efficiency of decision making units," European Journal of Operational Research, Elsevier, vol. 2(6), pages 429-444, November.
    12. Chambers,Robert G., 1988. "Applied Production Analysis," Cambridge Books, Cambridge University Press, number 9780521314275, September.
    13. Mary O'Mahony & Marcel P. Timmer, 2009. "Output, Input and Productivity Measures at the Industry Level: The EU KLEMS Database," Economic Journal, Royal Economic Society, vol. 119(538), pages 374-403, June.
    14. William Greene, 2004. "Distinguishing between heterogeneity and inefficiency: stochastic frontier analysis of the World Health Organization's panel data on national health care systems," Health Economics, John Wiley & Sons, Ltd., vol. 13(10), pages 959-980, October.
    15. Michael Luhnen, 2009. "Determinants of Efficiency and Productivity in German Property-Liability Insurance: Evidence for 1995–2006," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 34(3), pages 483-505, July.
    16. Pasinetti,Luigi, 1993. "Structural Economic Dynamics," Cambridge Books, Cambridge University Press, number 9780521432825, September.
    17. Caves, Douglas W & Christensen, Laurits R & Diewert, W Erwin, 1982. "The Economic Theory of Index Numbers and the Measurement of Input, Output, and Productivity," Econometrica, Econometric Society, vol. 50(6), pages 1393-1414, November.
    18. Miozzo, Marcela & Walsh, Vivien, 2006. "International Competitiveness and Technological Change," OUP Catalogue, Oxford University Press, number 9780199259243.
    19. Kuznets, Simon, 1973. "Modern Economic Growth: Findings and Reflections," American Economic Review, American Economic Association, vol. 63(3), pages 247-258, June.
    20. Kopp, Raymond J & Smith, V Kerry, 1985. "The Measurement on Non-neutral Technological Change," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 26(1), pages 135-159, February.
    21. Stephen D. Oliner & Daniel E. Sichel, 2000. "The Resurgence of Growth in the Late 1990s: Is Information Technology the Story?," Journal of Economic Perspectives, American Economic Association, vol. 14(4), pages 3-22, Fall.
    22. Sanjeev Dewan & Chung-ki Min, 1997. "The Substitution of Information Technology for Other Factors of Production: A Firm Level Analysis," Management Science, INFORMS, vol. 43(12), pages 1660-1675, December.
    23. Hugo Fuentes & Emili Grifell-Tatjé & Sergio Perelman, 2001. "A Parametric Distance Function Approach for Malmquist Productivity Index Estimation," Journal of Productivity Analysis, Springer, vol. 15(2), pages 79-94, March.
    24. Barras, Richard, 1986. "Towards a theory of innovation in services," Research Policy, Elsevier, vol. 15(4), pages 161-173, August.
    25. Christensen, Laurits R & Jorgenson, Dale W & Lau, Lawrence J, 1973. "Transcendental Logarithmic Production Frontiers," The Review of Economics and Statistics, MIT Press, vol. 55(1), pages 28-45, February.
    26. Sanjeev Dewan & Kenneth L. Kraemer, 2000. "Information Technology and Productivity: Evidence from Country-Level Data," Management Science, INFORMS, vol. 46(4), pages 548-562, April.
    27. Winston T. Lin, 2013. "Assessing the impacts of the integration of the ICT investments of Taiwan and China upon economic growth in Taiwan," Chapters, in: Peter C.Y. Chow (ed.), Economic Integration Across the Taiwan Strait, chapter 3, pages 56-80, Edward Elgar Publishing.
    28. Kevin J. Stiroh, 2002. "Are ICT Spillovers Driving the New Economy?," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 48(1), pages 33-57, March.
    29. Benlian, Alexander & Hess, Thomas, 2011. "Opportunities and risks of Software-as-a-Service: Findings from a survey of IT executives," Publications of Darmstadt Technical University, Institute for Business Studies (BWL) 58025, Darmstadt Technical University, Department of Business Administration, Economics and Law, Institute for Business Studies (BWL).
    30. Luis Orea, 2002. "Parametric Decomposition of a Generalized Malmquist Productivity Index," Journal of Productivity Analysis, Springer, vol. 18(1), pages 5-22, July.
    31. H. David Sherman & Joe Zhu, 2006. "Service Productivity Management," Springer Books, Springer, number 978-0-387-33231-4, December.
    32. Malerba,Franco & Brusoni,Stefano (ed.), 2007. "Perspectives on Innovation," Cambridge Books, Cambridge University Press, number 9780521866644, September.
    33. James Langabeer & Yasar Ozcan, 2009. "The economics of cancer care: longitudinal changes in provider efficiency," Health Care Management Science, Springer, vol. 12(2), pages 192-200, June.
    34. R. D. Banker & A. Charnes & W. W. Cooper, 1984. "Some Models for Estimating Technical and Scale Inefficiencies in Data Envelopment Analysis," Management Science, INFORMS, vol. 30(9), pages 1078-1092, September.
    35. Paul Chwelos & Ronald Ramirez & Kenneth L. Kraemer & Nigel P. Melville, 2010. "Research Note ---Does Technological Progress Alter the Nature of Information Technology as a Production Input? New Evidence and New Results," Information Systems Research, INFORMS, vol. 21(2), pages 392-408, June.
    36. Arcelus, F. J. & Arozena, P., 1999. "Measuring sectoral productivity across time and across countries," European Journal of Operational Research, Elsevier, vol. 119(2), pages 254-266, December.
    37. Erik Brynjolfsson & Lorin Hitt, 1996. "Paradox Lost? Firm-Level Evidence on the Returns to Information Systems Spending," Management Science, INFORMS, vol. 42(4), pages 541-558, April.
    38. Leslie P. Willcocks & Mary C. Lacity, 2012. "The New IT Outsourcing Landscape," Palgrave Macmillan Books, Palgrave Macmillan, number 978-1-137-01229-6, March.
    39. B B M Shao & W S Shu, 2004. "Productivity breakdown of the information and computing technology industries across countries," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 55(1), pages 23-33, January.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Chou, Yen-Chun & Hao-Chun Chuang, Howard & Shao, Benjamin B.M., 2014. "The impacts of information technology on total factor productivity: A look at externalities and innovations," International Journal of Production Economics, Elsevier, vol. 158(C), pages 290-299.
    2. B B M Shao & W S Shu, 2004. "Productivity breakdown of the information and computing technology industries across countries," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 55(1), pages 23-33, January.
    3. Mai, Nhat Chi, 2015. "Efficiency of the banking system in Vietnam under financial liberalization," OSF Preprints qsf6d, Center for Open Science.
    4. Lin, Winston T. & Chiang, Chung-Yean, 2011. "The impacts of country characteristics upon the value of information technology as measured by productive efficiency," International Journal of Production Economics, Elsevier, vol. 132(1), pages 13-33, July.
    5. Alessandra Cepparulo & Gilles Mourre, 2020. "How and How Much? The Growth-Friendliness of Public Spending through the Lens," European Economy - Discussion Papers 132, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
    6. Ronald Kumar, 2014. "Exploring the role of technology, tourism and financial development: an empirical study of Vietnam," Quality & Quantity: International Journal of Methodology, Springer, vol. 48(5), pages 2881-2898, September.
    7. S J Ho & S K Mallick, 2010. "The impact of information technology on the banking industry," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 61(2), pages 211-221, February.
    8. Liao, Hailin & Wang, Bin & Li, Baibing & Weyman-Jones, Tom, 2016. "ICT as a general-purpose technology: The productivity of ICT in the United States revisited," Information Economics and Policy, Elsevier, vol. 36(C), pages 10-25.
    9. Zabala-Iturriagagoitia, Jon Mikel & Aparicio, Juan & Ortiz, Lidia & Carayannis, Elias G. & Grigoroudis, Evangelos, 2021. "The productivity of national innovation systems in Europe: Catching up or falling behind?," Technovation, Elsevier, vol. 102(C).
    10. Shu-Chuan Chen & Da-Sheng Lee & Chien-Yi Huang, 2021. "Evaluating the Sustainable Operating Performance of Electronics Industry Groups: Taiwanese Firms in Mainland China," Sustainability, MDPI, vol. 13(21), pages 1-28, October.
    11. Kumar, Ronald Ravinesh & Stauvermann, Peter Josef & Samitas, Aristeidis, 2016. "The effects of ICT⁎ on output per worker: A study of the Chinese economy," Telecommunications Policy, Elsevier, vol. 40(2), pages 102-115.
    12. Ronald Kumar & Madhukar Singh, 2014. "Role of health expenditure and ICT in a small island economy: a study of Fiji," Quality & Quantity: International Journal of Methodology, Springer, vol. 48(4), pages 2295-2311, July.
    13. Fazlollahi, Ariyan & Franke, Ulrik, 2018. "Measuring the impact of enterprise integration on firm performance using data envelopment analysis," International Journal of Production Economics, Elsevier, vol. 200(C), pages 119-129.
    14. Ronald Ravinesh Kumar & Peter Josef Stauvermann & Syed Jawad Hussain Shahzad, 2017. "Can technology provide a glimmer of hope for economic growth in the midst of chaos? A case of Zimbabwe," Quality & Quantity: International Journal of Methodology, Springer, vol. 51(2), pages 919-939, March.
    15. Ronald Ravinesh Kumar & Peter Josef Stauvermann & Nikeel Kumar & Syed Jawad Hussain Shahzad, 2019. "Exploring the effect of ICT and tourism on economic growth: a study of Israel," Economic Change and Restructuring, Springer, vol. 52(3), pages 221-254, August.
    16. Franz Haider & Robert Kunst & Franz Wirl, 2021. "Total factor productivity, its components and drivers," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 48(2), pages 283-327, May.
    17. Kumar, Ronald Ravinesh & Kumar, Radika Devi & Patel, Arvind, 2015. "Accounting for telecommunications contribution to economic growth: A study of Small Pacific Island States," Telecommunications Policy, Elsevier, vol. 39(3), pages 284-295.
    18. Federico Biagi, 2013. "ICT and Productivity: A Review of the Literature," JRC Working Papers on Digital Economy 2013-09, Joint Research Centre.
    19. Saggi Nevo & Michael Wade & Wade D. Cook, 2010. "An empirical study of IT as a factor of production: The case of Net-enabled IT assets," Information Systems Frontiers, Springer, vol. 12(3), pages 323-335, July.
    20. Hideyuki Mizobuchi, 2022. "Measuring the shift in the short-run production frontier," Evolutionary and Institutional Economics Review, Springer, vol. 19(1), pages 271-300, April.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:proeco:v:172:y:2016:i:c:p:43-53. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/ijpe .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.