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A neglected input to production: the role of ICT-schooled employees in firm performance

Eva Hagsten (University of Iceland, Reykjavik, Iceland)
Anna Sabadash (Eurostat, Luxembourg City, Luxembourg)

International Journal of Manpower

ISSN: 0143-7720

Article publication date: 5 June 2017

Abstract

Purpose

The purpose of this paper is to broaden the perspective on how information and communication technology (ICT) relates to productivity by introducing a novel ICT variable: the share of ICT-schooled employees in firms, an intangible input often neglected or difficult to measure.

Design/methodology/approach

Based on a Cobb-Douglas production function specification, the association between the share of ICT-schooled employees and firm productivity is estimated by the use of unique comparable multi-linked firm-level data sets from statistical offices in six European countries for the period of 2001-2009.

Findings

There are indications that the share of ICT-schooled employees significantly and positively relates to productivity, and also that this relationship is generally more persistent than that of ICT intensity of firms, measured as the proportion of broadband internet-enabled employees. However, the strength of the association varies across countries and demonstrates that underlying factors, such as industry structure and institutional settings might be of importance too.

Research limitations/implications

Data features and the way to access harmonised firm-level data across countries affect the choice of econometric approach and output variable.

Practical implications

The results emphasise the importance of specific ICT skills in firms independently of where in the organisation the employee works.

Originality/value

Studies on associations between employees with specific (higher) education based on formal credentials and productivity are rare. Even more uncommon is the cross-country setting with harmonised data including general ICT intensity of firms.

Keywords

Acknowledgements

This study was initiated when the authors were affiliated, respectively, to Statistics Sweden and DG JRC of the European Commission. The views expressed are purely those of the authors. Special thanks go to the following persons for helpful comments and support during the course of work: Eric Bartelsman, Martin Falk, Michael Polder, George van Leeuwen and Barbara Fraumeni. The authors are also thankful for insightful suggestions of improvements made by two anonymous referees.

Citation

Hagsten, E. and Sabadash, A. (2017), "A neglected input to production: the role of ICT-schooled employees in firm performance", International Journal of Manpower, Vol. 38 No. 3, pp. 373-391. https://doi.org/10.1108/IJM-05-2015-0073

Publisher

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Emerald Publishing Limited

Copyright © 2017, Emerald Publishing Limited