ICT adoption in Irish manufacturing: An example of merging two CSO business microdata sets Stefanie Haller CSO Business Statistics Seminar, Dublin 26 February 2008

Research question ● What drives the adoption and diffusion of Information and Communication Technology (ICT) at firm level?

Approach Important factors for technology adoption Firm characteristics sectoral specialisation, firm size, internal organisation, human capital Local industrial structure spillover effects, competitive pressure, network externalities Information from two data sets Census of Industrial Production (enterprise data) Survey on E-Commerce and ICT

Census of Industrial Production collected annually in its current form since 1991 covers all enterprises/local units with 3 or more employees in mining, manufacturing and utilities contains information on turnover, employment (type), ownership, exports, location, industry affiliation problems for use employment refers to one week in September imputed/estimated information

Survey on E-Commerce and ICT collected annually since 2003 (pilot 2002) covers 40-50% of enterprises in CIP (sample re-drawn every year), broadly representative contains information on internet usage, connection to internet, reasons for using the internet, sales and purchases via the internet, barriers to e-commerce problems for use data coding changed over time addition/elimination of options to multiple- choice questions

Final data set Merge CIP with E-Commerce Survey via unique plant identifier Obtain unbalanced panel of NACE sectors – for period for most indicators – for period for information relating to monetary values – exclude sectors 16 (tobacco) and 23 (refined petroleum) for lack of variation and reasons of confidentiality

Indicators of ICT adoption Two discrete indicators: 1)Has the enterprise received online orders 2)Index of services offered online (0-5): marketing the enterprise’s products facilitating access to product catalogues and price lists customised page for repeat clients delivering digital products providing after sales support Two continuous indicators: 1) Share of employees using computers 2) Share of turnover due to online transactions

Discrete indicators of ICT adoption - Summary statistics

Continuous indicators of ICT adoption - Summary statistics

Empirical Methodology Probit regressions for discrete indicators of ICT adoption Fractional logit regressions for continuous indicators of ICT adoption (Papke and Wooldridge, 1996) where –lnto=log(turnover 1000€) –lnwpe=log(wages per employee in 1000 € ) –mantech: share of managerial & technical staff in employees –clerical: share of clerical staff in employees –exint: export intensity –multi=1 if enterprise is part of multi-plant enterprise

ICT adoption: Probit regressions for discrete indicators 0

ICT adoption: Fractional logit regressions for continuous indicators

Summary and Conclusions Firms with more skilled employees, firms in ICT- related industries, firms located in the Dublin area more successful in ICT adoption Proximity to firms that have adopted ICT positively associated with the share of employees using computers and the share of turnover due to online transactions Patterns of ICT adoption differ for domestic and foreign-owned firms regarding size and export intensity  Delays and differences in ICT adoption rates

industry(j)-region(r) spillovers industry spillovers where Y a = # of firms using computers if the dependent variable is the share of employees using computers = # of firms having received orders online if the dep. var. is the share of turnover due to internet transactions Empirical Methodology - horizontal spillovers

ICT adoption: Continuous indicators with interactions for foreign firms