The Relationship between Technology, Innovation, and Firm Performance: Empirical Evidence on E-Business in Europe

This article analyzes the relationship between the usage of Internet-based technologies, different types of innovation, and performance at the firm level. Data for the empirical investigation originates from a sample of 7,302 European enterprises. The empirical results show that Internet-based technologies were an important enabler of innovation in the year 2003. It was found that all studied types of innovation, including Internet-enabled and non-Internet-enabled product or process innovations, are positively associated with turnover and employment growth. Firms that rely on Internet-enabled innovations are at least as likely to grow as firms that rely on non-Internet-enabled innovations. Finally, it was found that innovative activity is not necessarily associated with higher profitability. Possible reasons for this and implications are discussed.firm performance;innovation;information technology;profitability;e-business

DURATION OF COMPETITIVE ADVANTAGE DUE TO EMERGING TECHNOLOGY ADOPTION (22)

The objective of this study is to provide a framework for predicting the expected duration of a competitive advantage due to adoption of an emerging technology, and suggest a process for generating technology specific benchmark of expected duration for the average adopting firm. Our framework integrates elements from the technology adoption (diffusion) cycle, hype cycles of emerging technologies, and the resource based view conceptualization of number of firms associated with a perfectly competitive market equilibrium. The objective of this synthesis is to generate a framework for estimating average technology diffusion time and standard deviation. Given the prevailing assumption that technology diffusion follows an approximate bell shaped distribution, we can use these two values to estimate the duration of a technology adoption related competitive advantage. We demonstrate the empirical estimation of expected duration of competitive advantage for an emerging technology (cloud computing) and a mature one (ERP)

Why IT Matters: An Empirical Study of E-Business Usage, Innovation, and Firm Performance

The article argues that IT continues to have strategic relevance for companies because it en-ables innovation. A conceptual link between the adoption of IT and innovation is established. This conceptual link allows a market-based, economic explanation for variations in IT payoffs among firms: The successful adoption of new IT leads to innovation. Depending on the be-havior of customers and competitors, a successful innovation can enable companies to gain competitive advantages. The economic theory of innovation suggests conditions that are nec-essary for firms to benefit from innovative activities. The relevance of IT as an important enabler of innovation is demonstrated using a very large sample of enterprises from different industries and countries in the European Union surveyed in late 2003. It is shown that a substantial share of firms use IT to introduce new processes into their business, or to offer new products or services to their customers. To study the rela-tionship between firm performance and innovation, I estimate an error component model that controls for unobserved market-specific effects and various firm-specific characteristics. The regression results indicate that innovative firms are generally more likely to exhibit increasing turnover and employment. In addition, firms that conduct product or service innovations are also more likely to be profitable. Furthermore, enterprises using IT to innovate perform at least as well as those innovating without IT. Yet, no significant relationship between process innovation and profitability is found, suggesting that firms might have problems to appropri-ate excess profits from process innovations, independent from whether they are enabled by IT or not. Possible reasons for this include time-lags between process innovations and profit gains, problems to effectively protect process innovations from imitation by competitors, or a lack of complementary resources. The results suggest that the returns to IT critically depend on whether and how IT investments are transferred into innovative activities. In addition, they suggest that IT will maintain its strategic importance as long as the IT industry remains inno-vative in developing new IT hardware and useful new business applications for it.Firm performance; Innovation; Information technology; Fixed effects logit

Enterprise Systems Adoption and Firm Performance in Europe: The Role of Innovation

Despite the ubiquitous proliferation and importance of Enterprise Systems (ES), little research exists on their post-implementation impact on firm performance, especially in Europe. This paper provides representative, large-sample evidence on the differential effects of different ES types on performance of European enterprises. It also highlights the mediating role of innovation in the process of value creation from ES investments. Empirical data on the adoption of Enterprise Resource Planning (ERP), Supply Chain Management (SCM), Customer Relationship Management (CRM), Knowledge Management System (KMS), and Document Management System (DMS) is used to investigate the effects on product and process innovation, revenue, productivity and market share growth, and profitability. The data covers 29 sectors in 29 countries over a 5-year period. The results show that all ES categories significantly increase the likelihood of product and process innovation. Most of ES categories affect revenue, productivity and market share growth positively. Particularly, more domainspecific and simpler system types lead to stronger positive effects. ERP systems decrease the profitability likelihood of the firm, whereas other ES categories do not show any significant effect. The findings also imply that innovation acts as a full or partial mediator in the process of value creation of ES implementations. The direct effect of enterprise software on firm performance disappears or significantly diminishes when the indirect effects through product and process innovation are explicitly accounted for. The paper highlights future areas of research.Enterprise Systems; ERP; SCM; CRM; KMS; DMS; IT Adoption; Post-implementation Phase; IT Business Value; Innovation; Firm Performance; Europe

Drivers and Impacts of ICT Adoption on Transport and Logistics Services.

The availability of high-quality transport and logistics services (TLS) is of paramount importance for the growth and competitiveness of an economy. The objective of this paper is to describe how European companies in this industry use information and communication technology (ICT) for conducting business and to assess the impact of this development for firms and the industry as a whole. A comparison with some important Asia Pacific economies is also presented, indicating that some of these countries (Singapore, Hong Kong, Japan, Taiwan, and Korea) boast very good transport infrastructure compared with the most developed European economies. Using the structure-conduct-performance (SCP) model and the bi-directional relationships of its elements, the paper identifies the links between ICT adoption and market structure, innovation dynamics, and firm performance. A set of recommendations on how to further improve the actual scenario of e-business in the TLS industry is also presented. The model could also be implemented in Asian countries

The Relationship between Technology, Innovation, and Firm Performance: Empirical Evidence on E-Business in Europe

This article analyzes the relationship between the usage of Internet-based technologies, different types of innovation, and performance at the firm level. Data for the empirical investigation originates from a sample of 7,302 European enterprises. The empirical results show that Internet-based technologies were an important enabler of innovation in the year 2003. It was found that all studied types of innovation, including Internet-enabled and non-Internet-enabled product or process innovations, are positively associated with turnover and employment growth. Firms that rely on Internet-enabled innovations are at least as likely to grow as firms that rely on non-Internet-enabled innovations. Finally, it was found that innovative activity is not necessarily associated with higher profitability. Possible reasons for this and implications are discussed

Drivers and Impacts of ICT Adoption on Transport and Logistics Services. An European Perspective.

The availability of high quality transport and logistics services (TLS) is of paramount importance for growth and competitiveness of an economy. The objective of this paper is to describe how companies in this industry use ICT for conducting business and to assess the impact of this development for firms and for the industry as a whole. Using the Structure-Conduct-Performance (SCP) model and the bi-directional relationships of its elements, the paper identifies the links between ICT adoption and market structure, innovation dynamics and firm performance. A set of recommendations on how to further improve the actual scenario of e-business in the TLS industry is also presented

Technological change: An analysis of the diffusion and implications of e-business technologies

This is a monograph that presents both a comprehensive literature review and original research results on the diffusion and the implications of e-business technologies. The diffusion of e-business technologies among firms is regarded as part of the ongoing process of technological change and economic development. It is shown that increasing returns to adoption can arise if the technologies do not substitute each other in their functionalities, leading to an endogenous acceleration mechanism of technological development. Hence, the probability to adopt any e- business technology is hypothesized to be an increasing function of previously adopted, related technologies. Early mover advantages can exist until the early mover has exhausted all possibilities of the new technological paradigm that promise positive returns on investment. Thus, history matters for the technological development of a firm and adoption decision today affect the expected value of any other related technology in the future. The existence of the endogenous acceleration mechanism has important implications for the management of new technologies, the performance of enterprises, the development of market structures and entire economies. The theory is empirically tested and supported in four independent inquiries, using two different exceptionally large datasets and different econometric methods. The existence of a growing digital divide among companies is demonstrated for the period between 1994 and 2002. In addition, the adoption of new e-business technologies by firms creates opportunities to conduct innovation, either to reduce the costs for a given output, to create a new product or service, or to deliver products to customers in a way that is new to the enterprise. Hence, it is argued that the adoption of new technologies does have strategic relevance for firms. Empirical evidence is presented showing that e-business technologies are currently an important enabler of innovations. It is found that innovative firms are more likely to grow. Also, e-business related innovations are at the very least not inferior to traditional kinds of innovations in terms of simultaneous occurrence with superior financial performance of enterprises. The study takes an interdisciplinary approach by relating both to the economics and the management literature, with the objective to show complementarities between both research fields and to draw conclusions for both kinds of audiences.Technological change, innovation, diffusion, adoption, multiple related technologies, e-business, ICT, firm performance, endogenous acceleration, competitive advantage