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Does India do IT? The nexus of IT, skills, organizational factors and productivity

Awadhesh Pratap Singh (Indian Institute of Management Lucknow, Mubarakpur, India)
Chandan Sharma (Indian Institute of Management Lucknow, Mubarakpur, India)

Journal of Economic Studies

ISSN: 0144-3585

Article publication date: 31 March 2020

Issue publication date: 6 May 2020

Abstract

Purpose

The goal of this study is to investigate the nexus among TFP (total factor productivity), IT (information technology) capital accumulation, skills and key plant variables of 34 Indian industries for the period of 2009–2015.

Design/methodology/approach

Annual Survey of Industries (ASI) data series are extracted and formulated using Microsoft SQL server. The authors employ Wooldridge (2009) technique to estimate productivity. To investigate the linkages among productivity, IT, skills and key plant variables, the authors estimate specifications using system generalized method of moments (sys-GMM). Advanced estimation techniques such as Heckman two-step process, probit equations, inverse Mills ratio and panel cointegration are applied to overcome problems of nonstationarity, omitted variables, endogeneity and reverse causality.

Findings

The results indicate that the level of IT capital influences the TFP of Indian industries, so does the level of skilled workers. The outcome suggests that intermediate capital goods, location and ownership type enable the strength of IT capital and that in turn boosts productivity. The authors fail to find any impact of regional factors and contractual labor on IT capital and productivity. While medium-level gender diversity is statistically significant to influence productivity, however, no complementarities exist between gender diversity and IT capital accumulation. The results also indicate that IT demand of Indian industries is sensitive to availability of skilled workforce, fuel and electricity and access to short-term funding.

Originality/value

To the authors' knowledge, this is the first study to investigate the nexus among TFP, IT capital accumulation, skills and organizational factors using ASI unit level data. Besides this, the paper offers two more novelties. First, it uses Wooldridge (2009) technique to estimate productivity, which is used by a handful of studies in the context of India. Second, the study identifies factors that impact productivity growth, IT demand and its adoption in Indian industries and thus contributes to growth and development literature.

Keywords

Acknowledgements

Authors are thankful to two anonymous referees for their valuable suggestion. This has substantially enriched the work.

Citation

Singh, A.P. and Sharma, C. (2020), "Does India do IT? The nexus of IT, skills, organizational factors and productivity", Journal of Economic Studies, Vol. 47 No. 3, pp. 597-626. https://doi.org/10.1108/JES-03-2019-0100

Publisher

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Emerald Publishing Limited

Copyright © 2019, Emerald Publishing Limited