ICTs and time-span in technical efficiency gains. A stochastic frontier approach over a panel of Italian manufacturing firms

This paper, in contrast to much of the existing literature, which focuses on the impact of Information and Communication Technologies (ICT) on labour productivity, assesses the relationship between ICTs investments and Technical Efficiency (TE) using a stochastic frontier approach. We use a large panel dataset of Italian manufacturing firms over the period 1995-2006 and confirm prior findings of the existing literature on ICT and productivity. In addition, we test on which extend the ICT investments influence the distance of the firm from the production frontier; that is, how ICT’s adoption influences the closing of the firm efficiency gap. We also test how long the effects of ICT investments on technical efficiency last. We find that ICT returns on TE are influenced by some firm’s characteristics, most of them idiosyncratic, such as management practices, labour organization, research and development.