By Thomas Hempell

Info and communique applied sciences (ICTs) create potentials for substantial productiveness earnings and for larger fiscal progress. even if, ICTs additionally pose different demanding situations to businesses so as to take advantage of those potentials. Highlighting the significance of thoughts, firm-sponsored education, and recruitment of high-skilled staff, this monograph analyses why and to what volume enterprises fluctuate of their features to make ICT paintings productively. The paintings additionally includes an in depth dialogue of financial concept referring to ICT use and complementary enterprise thoughts. additionally it presents a entire therapy of varied methodological matters about the dimension of firm-level productiveness in econometric analyses.

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2002; OECD, 2003). ICTs are used for a broad range of purposes. 5). Customisation of products and 34 2 Impacts of ICT as a general purpose technology Fig. 3. ICT applications in firms in Germany 2002 Source: ZEW ICT survey 2002 services and quality improvements are mentioned by about 72 and 63% of all firms correspondingly. Cost savings, in contrast, rank substantially lower as motives for ICT investments. Reductions of personnel and material costs are relevant for 55% and 45%. And only 41% use ICT for developing new products or services.

ICT expenses. The most comprehensive indicator for ICT use in firms is total expenses on ICT per employee (measured in logarithms, LN ICT ). This variable includes not only investment in software and hardware but also expenses for ICT personnel and external ICT services. The main virtue of this indicator is the fact that it covers all kinds of ICT engagement. Its main drawback consists in the fact that it is a flow variable that depends not only on real capital services of ICT, but is also strongly driven by other determinants, such as expected sales, cash flow, firm performance, liquidity, etc.

While the empirical analysis provided in this chapter aims at illustrating some first straightforward evidence on complements to ICT use, the subsequent chapters 4 and 5 will consider in much more detail the extent to which innovations on the one hand and firm-sponsored training programmes on the other help to make the use of ICT in firms more productive. These analyses will be based on a different data set, the Mannheim innovation panel, in order to apply econometric techniques that require a longitudinal structure of the data to yield consistent results for measuring the direct productivity contributions of inputs.

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