Abstract
ABSTRACTICT-intensive firms are often found to have a better performance than their non-ICT-intensive counterparts. Along with investing in ICT capital they have to adapt their production and business processes in order to reap the potentials implied by the use of ICT. Are these firms also more resilient in times of crisis? We study this question by exploiting a novel and unique data set from the Micro Moments Database. Covering 12 countries, 7 industries and the period from 2001 to 2010, the data allow us to distinguish between ICT-intensive and non-ICT-intensive firms within industries. We find evidence that indeed during the crisis in 2008 and 2009, ICT-intensive firms were hit less hard with respect to their productivity. This holds in particular for firms from service industries. Moreover, ICT-intensive firms were also more successful in introducing process innovations during that period which could explain their better productivity performance compared to non-ICT intensive firms.
Highlights
During an economic crisis the process of creative destruction is reinforced which comes with huge economic and social costs such as firm exits, unemployment and lower productivity
This section aims at providing evidence on whether ICT-intensive and non-ICT-intensive firms were differing with respect to their innovation behavior during the crisis and whether their relative innovativeness changed in that time
We find for process innovations in all four specifications a positive, significant interaction effect, indicating that during the crisis, ICT-intensive firms were able to increase their relative innovativeness with respect to processes
Summary
During an economic crisis the process of creative destruction is reinforced which comes with huge economic and social costs such as firm exits, unemployment and lower productivity To reduce these costs it is important to understand what makes firms, industries and countries more resilient. Applying a difference-in-difference framework, we find evidence that ICT-intensive firms, especially from service industries, were hit less hard by the economic crisis Their productivity level and growth hardly decreased during the period 2008 to 2009 whereas non-ICT-intensive firms experienced a strong reduction in productivity. ICT-intensive firms became relatively more innovative in terms of realizing process innovations This latter finding fits to the hypothesis that ICT allow firms to adjust their production processes in times of crisis and in that way allow them to cope better with the increased competitive pressure during an economic crisis. We contribute to the broader literature on ICT and productivity by illustrating the benefits of micro-aggregated industry data, which so far has not been used to study the ICT-productivity relationship
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