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Intangible Investment and Technical Efficiency: The Case of Software-Intensive Manufacturing Firms in Turkey

Author

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  • Derya Findik

    (Science and Technology Policy Studies Program, Middle East Technical University)

  • Aysit Tansel

    (Cornell University, Middle East Technical University, IZA, and ERF Cairo)

Abstract

This chapter analyzes the effect of intangible investment on firm efficiency with an emphasis on its software component. Stochastic production frontier approach is used to simultaneously estimate the production function and the determinants of technical efficiency in the software intensive manufacturing firms in Turkey for the period 2003-2007. Firms are classified based on the technology group. High technology and low technology firms are estimated separately in order to reveal differentials in their firm efficiency. The results show that the effect of software investment on firm efficiency is larger in high technology firms which operate in areas such as chemicals, electricity, and machinery as compared to that of the low technology firms which operate in areas such as textiles, food, paper, and unclassified manufacturing. Further, among the high technology firms, the effect of the software investment is smaller than the effect of research and development personnel expenditure. This result shows that the presence of R&D personnel is more important than the software investment for software intensive manufacturing firms in Turkey.

Suggested Citation

  • Derya Findik & Aysit Tansel, 2015. "Intangible Investment and Technical Efficiency: The Case of Software-Intensive Manufacturing Firms in Turkey," Koç University-TUSIAD Economic Research Forum Working Papers 1511, Koc University-TUSIAD Economic Research Forum.
    • Handle: RePEc:koc:wpaper:1511
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    More about this item

    Keywords

    Intangible assets; Software investment; Efficiency; Software intensive firms; Stochastic frontier analysis; Production.;
    All these keywords.

    JEL classification:

    • L21 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Business Objectives of the Firm
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance

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