ICT adoption in Irish manufacturing: An example

of merging two CSObusiness 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 onturnover, 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

Obtainunbalanced panel of NACE sectors 15-36

– for period 2002-2004 for most indicators– for period 2001-2004 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 orders2) 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 computers2) Share of turnover due to online transactions

Discrete indicators of ICT adoption - Summary statistics

Firms % of firms Firms % firms accepting/using 0 1 2 3 4 5 having received

computers orders onlineYear2001 1,852 10.62002 1,748 88.0 62.0 18.0 12.8 4.9 1.8 0.6 2,216 10.92003 2,121 91.3 59.7 18.9 14.1 5.3 1.4 0.7 1,694 14.52004 1,459 96.2 47.8 25.6 17.3 6.4 2.0 0.8 1,267 16.1

Ownershipdomestic 4,475 90.1 60.7 19.3 13.5 4.5 1.5 0.5 5,840 12.5foreign 853 99.4 38.4 26.4 20.4 10.5 2.6 1.8 1,189 13.3

Total 5,328 91.6 57.2 20.4 14.6 5.5 1.7 0.7 7,029 12.6

% of firms offering x services online

Continuous indicators of ICT adoption - Summary statistics

% of employees % of turnover

using computers due to online

Firms (mean) transactions (mean)

Year2001 1,801 1.232002 2,149 32.5 1.192003 1,650 33.6 1.872004 1,235 36.7 2.13

Ownershipdomestic 5,678 30.4 1.24foreign 1,157 49.1 2.96

ICT classificationICT-producing 321 57.3 4.64ICT-using 2,505 39.6 1.62non ICT 4,009 28.7 1.23

Total 6,835 34.0 1.53

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

ijrttrjijrtijrt

ijrtijrtijrtijrtijrtijrt

agemulti

exintclericalmantechwpetoY

76

54321 lnln

ICT adoption: Probit regressions for discrete indicators

0

Dep. Variable

lnto 1.156 (0.000) *** 1.130 (0.000) *** 0.990 (0.696) 1.039 (0.428)lnwpe 1.089 (0.332) 1.178 (0.424) 1.113 (0.251) 0.559 (0.015) **mantech 2.900 (0.000) *** 2.333 (0.021) ** 1.133 (0.580) 2.125 (0.056) *clerical 3.470 (0.000) *** 3.288 (0.010) *** 2.484 (0.000) *** 1.356 (0.588)age 0.996 (0.007) *** 0.995 (0.068) * 1.003 (0.046) ** 1.001 (0.799)exint 1.990 (0.000) *** 0.912 (0.530) 1.488 (0.000) *** 0.881 (0.499)multi 1.254 (0.077) * 0.865 (0.415) 0.861 (0.358) 0.971 (0.913)Dublinborder 0.824 (0.025) ** 1.383 (0.076) * 0.756 (0.008) *** 1.027 (0.913)midlands 0.785 (0.035) ** 1.233 (0.393) 0.660 (0.001) *** 0.513 (0.028) **west 1.043 (0.648) 0.977 (0.904) 1.021 (0.851) 0.524 (0.018) **mideast 0.923 (0.379) 0.881 (0.535) 0.832 (0.095) * 0.764 (0.296)midwest 0.945 (0.583) 1.015 (0.944) 0.773 (0.030) ** 0.784 (0.296)southeast 0.806 (0.011) ** 1.135 (0.441) 0.696 (0.000) *** 0.545 (0.022) **southwest 0.888 (0.141) 0.867 (0.361) 0.723 (0.001) *** 0.773 (0.277)20012002 1.069 (0.180) 0.923 (0.444)2003 1.012 (0.699) 1.043 (0.557) 1.247 (0.000) *** 1.039 (0.731)2004 1.205 (0.000) *** 1.210 (0.018) ** 1.280 (0.000) *** 1.143 (0.267)constant 7.689 (0.000) *** 6.531 (0.003) *** 0.184 (0.000) *** 1.586 (0.553)ICT producing 1.407 (0.026) ** 1.685 (0.000) *** 0.997 (0.988) 1.171 (0.318)ICT using 1.343 (0.000) *** 1.521 (0.000) *** 1.156 (0.020) ** 1.085 (0.625)non-ICT

ObsFirms

omitted category omitted category omitted category omitted category

omitted category omitted categoryomitted category omitted category

omitted category omitted category omitted category omitted category

4385 832 5678 1108

no of services offered online firm accepts/has received orders online

2460 446 2757

foreign firms

474

domestic firms foreign firms domestic firms

ICT adoption: Fractional logit regressions for continuous indicators

Dep. Variable

lnto 0.017 (0.020) 0.227 (0.084) ***lnwpe 0.607 (0.086) *** -0.391 (0.300)mantech 2.200 (0.221) *** 0.375 (0.578)clerical 2.591 (0.175) *** -0.622 (0.539)age -0.003 (0.001) * -0.005 (0.005)exint 0.324 (0.076) *** 0.722 (0.250) ***multi 0.042 (0.112) -1.390 (0.468) ***ind-reg spillovers 2.319 (0.225) *** 5.458 (0.365) ***ind spillovers 0.895 (0.238) *** 0.323 (0.745)Dublinborder -0.347 (0.080) *** -0.073 (0.304)midlands -0.306 (0.102) *** -0.686 (0.383) *west 0.007 (0.096) -0.785 (0.329) **mideast -0.225 (0.088) ** -0.295 (0.320)midwest -0.151 (0.096) -0.738 (0.302) **southeast -0.256 (0.081) *** -0.495 (0.381)southwest -0.081 (0.078) 0.031 (0.409)ICT producing 0.614 (0.122) *** 0.175 (0.310)ICT using 0.387 (0.051) *** 0.169 (0.241)non-ICTconstant -6.350 (0.330) *** -5.960 (0.664) ***year dummies y y

Obs / Firms 4,689 2,707 6,188 3,041

share of employees share of turnover due to using computers online transactions

omitted category

omitted category omitted category

omitted category

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

Indreg jrt=Y jrta

Y jrt

Ind j r t=Y jta −Y jrt

a

Y jt−Y jrt

• industry spillovers

where Ya

= # 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

-0,051 (0.023) ** 0,105 (0.103)0,621 (0.089) *** -0,064 (0.333)1,869 (0.257) *** -0,254 (0.760)2,556 (0.187) *** -0,345 (0.425)

-0,001 (0.001) -0,003 (0.005)0,279 (0.097) *** 0,693 (0.282) **0,020 (0.122) -1,387 (0.479) ***

-1,604 (0.848) * 1,176 (2.908)0,170 (0.044) *** 0,234 (0.151)0,129 (0.295) -1,182 (1.053)1,303 (0.463) *** 1,405 (1.425)0,170 (0.514) -0,772 (1.897)

-0,006 (0.004) * 0,004 (0.011)-0,296 (0.195) 0,497 (0.610)2,376 (0.226) *** 5,464 (0.377) ***0,856 (0.234) *** 0,242 (0.757)

-5,903 (0.336) *** -5,968 (0.704) ***y yy yy y

4.689 2.707 6.188 3.041-2048,8 -343,9

Dep. Variable share of employees share of turnover dueusing computers to online transactions

lntolnwpemantechclericalageexintmultifofo_lntofo_lnwpefo_mantechfo_clericalfo_agefo_exintind-reg spilloversind spilloversconstantregion dummiestime dummiesICT class

Obs / FirmsLogL