Can Technological Advancements be Effective for the Economic Value of the Companies? Insights from the DSE Listed Food and Allied Companies

Abstract

Purposes: Adopting technology in the production process increases the overall efficiency of inputs used in the production, and enhances a firm's economic value. Methodology: This study tries to explore the impact of technology on firm performance from 8 listed Food and Allied companies spanning 2015-2021 listed on DSE. Total factor productivity (TFP) is an inclusive measure that apprehends the contribution of all aspects that improve the efficiency of production including technology. Therefore, the contribution of technical advancement to the firm is captured by TFP, applying the Solow residual method. TFP is the main study variable and some other control variables, such as tangibility, liquidity, firm size, and growth; long-term leverage ratio and net debt tax shield are used as exogenous variables to increase the robustness of the model and improve the value of both the firm performance ROA and ROE. Results: Finally, this study concluded that investment in technology in the food and allied sectors has a notable impact on a firm’s performance. Therefore, the study indicates that economists, policymakers, and business management can use TFP growth as an indicator for making their long-term decision policy and increase the overall sustainable economic productivity, growth and efficiency of the firm and can contribute to accelerating the economic growth of the country.