Stage in the development of ICT and firms' productivity

A number of researches have been made on the productive effect of ICT, including its relationship with corporate structure and business process. However, regarding the relationship between the development stage of ICT application and the productivity, only some conceptual frameworks of development stages had been suggested and no experimental study has been made. In this paper, using the individual data from Information and Communication Technology Survey Year 2006 of Ministry of Economy, Trade and Industry, we examine how the productivity changes according the stage of development of ICT, estimating the production function. When we classify the stages of development of ICT application into three stages of section-wise system application, company-wide system application and inter-company system application, it became apparent that its effect on the productivity increases according to the development of stages. For instance, when we use the production function assuming that the difference of development stage would affect on TFP level, the company with developed company-wide system application has an added value productivity which is 1.065-fold higher than companies with section-wide system application. We also obtained an outcome that the company in which the inter-company system application is developed has the added value productivity which is 1.105-fold higher than companies with company-wide system application.