Ict adoption, software investment and firm efficiency in Turkey

Thesis Type: Doctorate

Institution Of The Thesis: Orta Doğu Teknik Üniversitesi, Graduate School of Social Sciences, Department of Economics, Turkey

Approval Date: 2013


Supervisor: AYSIT TANSEL


This thesis examines the impact of firm resources on Information and Communication Technologies (ICT) adoption by the Turkish business enterprises and the impact of software investment on firm efficiency by using firm level data. ICT adoption is measured at three levels: The first level is technology ownership. The second level is the presence of enterprise resource planning (ERP) and customer resource management (CRM). The third level is the use of narrowband and broadband technologies. The impact of firm resources on each technology level is tested by exploiting cross section and time dimension of the panel data. In the cross sectional analysis, two year time lag between ICT adoption variables and firm resources is introduced. In the panel data analysis, the time lag is extended to four years to test whether the firm resources generate similar effects as the time lag is extended. Therefore, we could mention two main effects of the firm resources on ICT adoption. These are immediate effects and long term effects. Immediate effects could arise when the time lag between firm resources and ICT adoption is two years. Long term effect indicates four year time lag between firm resources and adoption. According to the results, some firm resources generate only immediate effects while others have both immediate and long term effects on ICT adoption. This thesis also analyzes the effect of intangible investment on firm efficiency with emphasis on software component of ICT. Stochastic frontier approach is used to simultaneously estimate the production function and the determinants of technical efficiency in the software intensive manufacturing firms in Turkey for the period 2003-2007. During this period, the number of firms making software investment decreased while those firms which already made software investment in the past became more software-intensive. The main question asked is as follows. Is the increase in the intensity of software investment turns into efficiency gains for the Turkish manufacturing firms? Firms are classified based on their technology type. High technology and low technology firms are estimated separately in order to reveal differentials in their firm efficiency. The results show that the effect of software investment on firm efficiency is larger in high technology firms which operate in areas such as chemicals, electricity, and machinery as compared to that of the low technology firms which operate in areas such as textiles, food, paper, and unclassified manufacturing. Further, among the high technology firms, the effect of the software investment is smaller than the effect of research and development personnel expenditure, which is another intangible investment.