The Effect of Changing Technology Use on Plant Performance in the Canadian Manufacturing Sector

Abstract

This paper investigates how changes in technology use of individual plants in the Canadian manufacturing sector are related to two measures of performance - productivity growth and market-share growth. The paper describes whether plants are adopting new advanced technologies and if they do so, whether they enjoy superior performance in these two areas. It makes use of panel data on advanced technology use from Statistics Canada’s 1993 and 1998 advanced manufacturing surveys that are combined with longitudinal data on plant performance. Growth in technology use during the period is significantly associated with relative productivity growth. In turn, growth in relative labour productivity is translated into growth in market share. Plants that improve their production efficiencies or produce higher quality products are able to realize gains in market share. Growth in the use of advanced technologies also had a positive impact on a plant’s growth in market share, probably through its impact on product innovation. The market rewards those businesses that managed to improve their efficiency or the quality of their product and concomitantly their labour productivity with an increase in market share. The paper also investigates other plant characteristics that are related to productivity and marketshare growth. R&D is related to market-share growth. The use of information and communications networks for ordering goods and services is associated with higher productivity growth.