Technology Use, Organisational Flexibility and Innovation: Evidence for Germany

This paper investigates to what extent the usage of information and communication technology (ICT) fosters innovation activities by facilitating more flexible organisational structures in firms. We distinguish between functional flexibility (the ability of workers to co-operate and take decentralised decisions) and numerical flexibility (the reduction of fixed costs, mainly due to outsourcing business processes). Our results from a large and representative data set of firms in Germany show that ICT use is associated with an increase in both types of flexibility but the implications for innovation activities differ. Functional flexibility is strongly positively associated with product innovations. In contrast, numerical flexibility allows firms to ?buy? innovations in the short run, but reduces innovative capacity in the longer run. --ICT usage,flexibility,innovations

What's Spurious, What's Real? Measuring the Productivity Impacts of ICT at the Firm-Level

In order to assess the productivity effects of information and communication technologies (ICT), regressions based on cross?sectional firm?level data may yield unreliable results for the commonly employed production function framework. In this paper, various estimation biases and econometric strategies to overcome their sources are discussed. The effects are illustrated on the basis of a representative set of panel data for German service firms. The application of a suited SYS?GMM estimator yields evidence for significant productivity effects of ICT which are substantially smaller though than those suggested by cross?section or pooled OLS estimates. --Productivity,Information and Communication Technologies,Production Function Estimation,Panel Data,Services

Do Computers Call for Training? Firm-level Evidence on Complementarities Between ICT and Human Capital Investments

This paper explores whether investments in information and communication technologies (ICT) and firm?sponsored training programmes are complementary. Three approaches are applied to panel data from German service companies for the time period 1994?98. Results for a system of interrelated factor demands indicate that training complements ICT but not other capital goods. SYS?GMM estimates of production functions reveal that ICT capital is most productive if complemented by training measures in skill?intensive firms. Comparing the impacts on productivity and wage costs shows that ICT raise the profitability of training high?skilled employees. --Productivity,Training,Information and Communication Technologies,Complementarities,Services,Panel Data

Does Experience Matter? Innovations and the Productivity of ICT in German Services

In this paper, it is argued that ICT investment is closely linked with complementary innovations and most productive in firms with innovative experience. In an analysis based on firm–level panel data covering the period 1994–99, system GMM estimates for an extended production function framework reveal significant productivity effects of ICT in the German service sector. Moreover, there is strong support for the hypothesis that the experience gained from past process innovations is a specific feature that makes ICT investment more productive. The results suggest that ICT may have been contributing to productivity differentials between firms

Technology Use, Organisational Flexibility and Innovation : Evidence for Germany

This paper investigates to what extent the usage of information and communication technology (ICT) fosters innovation activities by facilitating more flexible organisational structures in firms. We distinguish between functional flexibility (the ability of workers to co-operate and take decentralised decisions) and numerical flexibility (the reduction of fixed costs, mainly due to outsourcing business processes). Our results from a large and representative data set of firms in Germany show that ICT use is associated with an increase in both types of flexibility but the implications for innovation activities differ. Functional flexibility is strongly positively associated with product innovations. In contrast, numerical flexibility allows firms to 'buy' innovations in the short run, but reduces innovative capacity in the longer run

Do Computers Call for Training? Firm-level Evidence on Complementarities Between ICT and Human Capital Investments

This paper explores whether investments in information and communication technologies (ICT) and firms sponsored training programmes are complementary. Three approaches are applied to panel data from German service companies for the time period 1994. Results for a system of interrelated factor demands indicate that training complements ICT but not other capital goods. SYS GMM estimates of production functions reveal that ICT capital is most productive if complemented by training measures in skill intensive firms. Comparing the impacts on productivity and wage costs shows that ICT raise the profitability of training high skilled employees

ICT, Innovation and Business Performance in Services: Evidence for Germany and the Netherlands

Using panel data for German and Dutch firms from the services sector, this paper analyses the importance of ICT capital deepening and innovation for productivity. We employ a model that takes into account that innovation and ICT use may be complementary. The results show that the contribution of ICT capital deepening is raised when firms combine ICT use and technological innovations on a more permanent basis. Moreover, the joint impact of ICT use and permanent technological innovation on productivity appears to be of the same order of magnitude in the two countries. However, the direct impacts of innovation on multi-factor productivity seems to be more robust for Germany than for the Netherlands. --Productivity,Information and Communication Technologies,Innovation,Services,Panel Data

What’s Spurious, What’s Real? Measuring the Productivity Impacts of ICT at the Firm-Level

In order to assess the productivity effects of information and communication technologies (ICT), regressions based on cross–sectional firm–level data may yield unreliable results for the commonly employed production function framework. In this paper, various estimation biases and econometric strategies to overcome their sources are discussed. The effects are illustrated on the basis of a representative set of panel data for German service firms. The application of a suited SYS–GMM estimator yields evidence for significant productivity effects of ICT which are substantially smaller though than those suggested by cross–section or pooled OLS estimates

Computer Use and the Employment Status of Older Workers

In Germany, the labor market participation of older workers decreased sharply during the last three decades. A growing discrepancy between actual and statutory age of retirement indicates, that employers and employees extensively use the possibilities of early retirement provided by the German public retirement system. As this period is characterized by a rapid diffusion of information and communication technologies (ICT) across German firms, these changes are often cited as a possible reason for the trend of early withdrawal from employment, as older workers may fall behind in adapting to new computer-related skill requirements. It is often argued that the skills of older workers are outdated, making them more exposed to technology shocks than younger workers. Or that older workers have lower learning capabilities. In addition, the incentive to invest in training may be lower for both older workers themselves and their employers as they will have less time to capture the returns to the training investment. As a result productivity and wages of older workers who do not use a computer may be lowered when new technologies are implemented and incentives to retire earlier may be increased for older employees. In Germany, the wage structure provides incentives for employers to send older workers into retirement, as wages for older workers are relatively high and inflexible. This study tests the hypothesis that older workers who do not use a computer on the job have a higher probability of changing their employment status. The employment status is observed within a period of two years as well as within a period of four years. In the analysis, an employment status change means that workers who are employed full-time in 1997 are employed part-time, retired or unemployed in 1999 (2001 respectively). In a first step the determinants of computer use of all full-time workers in 1997 are studied. It turns out that the probability of using a computer declines for the oldest workers aged 55 to 64, and increases with the individual level of education and occupational status. A significantly positive relation is found to using a computer at home as well as to hourly wages. In addition, the results show that a higher level of average computer use in an occupation highly increases the probability of using a computer for older and younger persons working in that occupation. However, recent increases in the average of occupational computer use make older workers significantly less likely to use a computer at work. In a second step, the correlation between older workers' computer use and their employment status change is analyzed. There is a positive partial correlation observable between computer use at work and the probability of continuing to work full-time in the sample of older workers within a two-year as well as within a four-year period. This correlation vanishes when considering various demographic, job-and firm-related factors, however. That indicates that other factors than computer use determine the voluntary or involuntary decision of older workers to change their employment status. The study is based on the German Socio-Economic Panel data. Abstract This paper analyzes the determinants of computer use by male employees and estimates the impact of computer use on the employment status for older workers, based on individual data from the German Socio-Economic Panel (GSOEP). In line with previous research on the diffusion of new technologies, a strong and negative relationship between the age of workers and computer use is found. The correlation of educational level and occupational status on computer use is significantly positive. However, the estimated impact of computer use on the change in employment status of older workers becomes insignificant when controlling for individual and firm-specific characteristics. JEL-Classification: J14, J26, O3

Apprenticeship Training in Germany – Investment or Productivity Driven?

The German dual apprenticeship system came under pressure in recent years because enterprises were not willing to offer a sufficient number of apprenticeship positions. A frequently made argument is that the gap could be closed if more firms would be willing to incur net costs during the training period. This paper investigates for the first time whether German enterprises on average indeed incur net costs during the apprenticeship period, i.e. if the impact of an increase in the share of apprentices on contemporary profits is negative. The paper uses the representative linked employer-employee panel data of the IAB (LIAB) and takes into account possible endogeneity of training intensity and unobserved heterogeneity in the profit estimation by employing panel system GMM methods. An increase in the share of apprentices has no effect on profits. This can be interpreted as a first indication that most establishments in Germany do not invest more in apprentices than their productivity effects during the apprenticeship period