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- Data from April 2013. Most recent data: Further Eurostat information, Main tables and Database.
Information and communication technology (ICT) is changing the way enterprises operate and do business: it is used in supply chain networks and management, it supports electronic distribution of products, data and information, it supports customer service and is used as a marketing channel, it is used in financial transactions, in internal communication, in human resources and employee relations, and it complements innovation activities. This has an impact not only on the performance of enterprises but also changes the nature of competition within the industries and it contributes to growth of the economy.
This article reports on some of the findings of a project that has focused on exploring the use and impact of ICT in the business sector – the ESSnet on Linking of Microdata on ICT Usage Project (ESSLimit).There are two main characteristics of this project that determined the scale and scope of its research. Firstly, 15 European statistical offices participated in the project which allowed for a wealth of enterprise-level data to be used, spanning 15 countries and many years and including not only ICT use data but also information derived from business registers, production surveys and innovation surveys. By linking these different data sets, richer information can be extracted from existing data sources and decisions taken at the firm level can be investigated in greater depth. Also, enterprise-level analysis of issues of interest carried out in each country was co-ordinated and based on comparable data ensuring internationally comparable results. Secondly, a cross-country dataset was built from aggregation of comparable enterprise-level data. Conceptually identical indicators were compiled at a relatively disaggregated industry level across multiple countries and time periods. This unique dataset was used for industry-level analysis within the project and will also be made available to the research community, under certain rules of access.
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Main statistical findings
Impact of ICT usage on productivity
The project has found that the impact of simpler usages of ICT at the firm level is diminishing as their levels of utilisation approach saturation. An example of this is given in Figure 1, where firms on the lower scale of intensity of ICT use (as measured by the proportion of internet-enabled employees with broadband access, BROADpct) seem to gain from increases in ICT use more easily than firms with higher intensity.
The impact estimate shows the percentage increase of productivity from a one per cent change in the variable in question.
The productivity impact is statistically significant in more countries for service firms, while the largest impacts are found among manufacturers. Moreover, the intensity of ICT use is highest among service firms, above 70 per cent, while the manufacturers remain nearly 15 percentage points lower, on average. In the earlier project with data through 2005 (ICT Impacts Project), the findings were different, with the manufacturers found to have the most significant impact. Using firm-level data, we find that once a particular ICT technology nears saturation, it no longer distinguishes productivity differences between firms. However, this does not mean it becomes irrelevant. A more ICT intensive method of production among firms in an industry may lead to changes in the market for factor inputs, such as skilled workers or high-quality materials, as well as the output market, for example decreasing switching costs.
At the industry level, increased usage of ICT, as measured by a higher percentage of broadband internet-enabled workers, correlates with increased labour productivity. The impact increases over time or with the level of broadband use. In a regression using a panel dataset of countries, industries (2-digit NACE level) and years, the effect (as measured above) intensifies from about 0.75 in the period 2002-04, to 1.1 in the period 2007-09. Similarly, the estimated impact is lower for country/industry/time observations with low intensity than it is for observations with high broadband intensity. One should be careful to actually conclude from this result that increased usage of broadband at the firm-level from already high levels will boost productivity. An alternate explanation is that as industry-level intensity increases, the level of complementary intangible assets also escalates. These would include software, business organization, databases, and possible network effects of increased online presence of customers and suppliers in the industry. Indeed, the project work on complementarity of ICT and business organization showed that these often increase together.
Measuring ICT usage
When measuring ICT use of enterprises one needs to take into account that particular ICT technologies have already approached saturation. Figure 2 gives the evolution of a set of e-commerce variables averaged across countries and industries. As can be seen, the proportion of firms with internet has been above 80 per cent since the beginning of the century, while the percentage of firms with fast internet has been reaching saturation only recently. Within the project some composite variables to capture ICT use have been generated, such as the already mentioned percentage of internet-enabled workers in firms with broadband access (BROADpct).
Figure 3 shows the ranking of this composite variable for manufacturing (15t37) and services (50t74) un-weighted, in 2009 and 2005. Overall, the rankings have not changed much, with a group of Nordic countries being the most mature users, although the manufacturing sector in France has lost relative ground as have the services firms in Slovenia.
ICT usage also varies by industry and by firm characteristics. Figure 4 shows the development over time, across countries, of sales or purchases through electronic means for medium-large firms (50 to 249 persons employed) in the Distribution sector.
The insights of the changing patterns of how ICT may affect output also mean that the traditional way of studying this phenomenon for producing versus non-ICT producing sectors may not be satisfactory anymore. This implies that both alternative ways of sorting firms as well as new intensity indicators that hold over time would be beneficial. Thus, a novel ICT intensity indicator was designed to measure ICT intensity at the firm level, by combining a wide range of ICT adoption variables (Enterprise Resource Planning (ERP), Customer Relation Management (CRM), Supply Chain Management (SCM), and Automated Data Exchange (ADE)). When one element underlying the variable is approaching saturation it can simply be exchanged for another. By doing this a long term-intensity indicator can be established. The indicator can also be used for sorting firms in low and high intensity of ICT use. Preliminary analysis with estimates of this indicator reveals that it can capture the relative ICT intensity of firms.
Other main results
ICT human capital The study on ICT human capital reveals that the field of study in higher education is important for the effect of education on firm performance, although the exact impact varies across countries and industries. Overall, the results indicate that there are performance gains from employing workers schooled in ICT, and that these gains are stronger than from further use of ICT technologies.
ICT support
The analysis on external and internal ICT support, investigates if the organisation of this support (outsourced or in-house) affects firm performance. The results show that firms with some kind of ICT support generally operates on higher productivity levels. No significant evidence is found to distinguish between the different types of ICT support. However, an indication is found of gains to be achieved by using a combination of external and internal support.
ICT in export activity
In exploring the international dimensions of ICT, the role of ICT in export activity is investigated. The estimations show that this activity indeed is affected by ICT. Existence of a website and e-sales seem important in a number of countries, especially for the export status of a firm. Results concerning e-sales reinforce the need to achieve easy to use and reliable systems for payments across countries which is one of the goals of the EU Digital Single Market.
ICT and innovation
In the analysis of ICT and innovations, the possible gain for firms of their joint adoption is explored. The results indicate a positive correlation between different new technologies, and are especially apparent in services and manufacturing industries across countries. The effects on the ICT industries, on the other hand, show far less homogeneity.
Adoption of e-business systems
A study on the adoption of e-business systems, based on questions more recently added to the EU-harmonised e-commerce survey, shows that the probability of adopting such systems increases with the intensity of fast internet in firms. Moreover, firms receive spillovers from global front-runners in their own industry. By contrast, there is no evidence of spillovers from best-practice firms in other industries nationally.
ICT and resilience
Some preliminary work on ICT and resilience shows that there are differences in the dispersion of output, product, and employment changes in ICT intensive sectors or for ICT intensive firms. For example, the standard deviation of the distribution of labour productivity across firms in an industry is positively correlated with the ICT intensity (measured by percentage of broadband internet-enabled employees), and increases as the intensity of ICT increases. Also, in a sub-sample of countries where longer time spans of data were available, it is found that the average standard deviation of a firm’s time series of productivity or output growth is higher for ICT intensive firms. What is not yet known is whether firms that face larger exogenous shocks to the business environment are more likely to adopt ICT, or whether use of ICT changes the nature of the shocks a firm faces.
Data sources and availability
Data used in all the analyses consist of firm-level information held by statistical offices. This included E-commerce survey data, Business Register data, data on various economic variables (captured by Structural Business Statistics), data from Community Innovation Survey, data on international (export) activities and for a subgroup of countries also information on skills of employees. The project generally makes use of data for the period 2000-2009. Some countries made available a longitudinal dataset with long time-series of firm-level inputs and outputs (Long Panel).
Project participants supplied information to the metadata repository (to secure availability of data and ensure comparability across countries, so that similarly labelled variables across countries actually reflect the same contents) and have put together a national microdata set. A common computer code was run on confidential firm-level linked dataset in each country and the aggregated output was securely delivered to a central server, where it was merged with results from other countries into a cross-country dataset. A dissemination protocol was developed, setting the rules for external access to the final cross-country dataset. This dataset will be made available for research purposes at the Eurostat safe centre. The project has also produced an industry-level indicator data set for public use.
Context
The Digital Agenda for Europe (DAE) aims to reboot Europe's economy and help Europe's citizens and businesses to get the most out of digital technologies. It is the first of seven flagships initiatives under Europe 2020, the EU's strategy to deliver smart sustainable and inclusive growth. Launched in May 2010, the DAE contains 101 actions, grouped around seven priority areas (for their list, see the original document of the DAE).
The ESSLimit project, financed by Eurostat, was launched in December 2010 (ending in November 2012) to address some of the issues pertaining to seven priority areas of DAE by investigating ICT in dimensions not earlier explored nationally or internationally. As an ESSnet project, ESSLimit also followed the objectives of the MEETS ('Modernisation of European Enterprise and Trade Statistics') programme, especially the objective of producing new relevant policy indicators without the need to collect more data and without increasing the burden on enterprises.
The project relied heavily on its predecessor, the 2006-2008 EurostatICT Impacts Project (with participants from 13 European statistical offices).
A final follow-up to the ESSLimit project, ESSLait is scheduled for 2013 with specific focus on data quality and impact analysis.
See also
- E-commerce statistics
- E-government statistics
- ICT security in enterprises
- Information society statistics
- Information society statistics at regional level
Further Eurostat information
Publications
Eurostat (2008), Information Society: ICT impacts Assessment by Linking Data from Different Sources
Hagsten, Eva et al (2012), Final report, ESSnet on Linking of Microdata on ICT Usage, Eurostat
ESSnet of Linking of Microdata on ICT Usage (2012), v34 ESSindicators, Eurostat
Database
- Information society, see:
- Computers and the Internet in households and enterprises (isoc_ci)
- Internet - Level of access, use and activities (isoc_ci_in)
- Enterprises - level of Internet access (NACE Rev. 2) (isoc_ci_in_en2)
- Enterprises - type of connection to the Internet (NACE Rev. 2) (isoc_ci_it_en2)
- Internet - Level of access, use and activities (isoc_ci_in)
- Policy indicators (isoc_pi)
- Broadband and Connectivity - Persons employed (isoc_bde15b_p)
- Benchmarking Digital Europe: 2011-2015 indicators (isoc_pibde15)
- Integration of internal processes (isoc_bde15dip)
- Integration with customers/suppliers and SCM (isoc_bde15disc)
- e-Commerce, Customer Relation Management (CRM) and secure transactions (isoc_bde15dec)
Dedicated section
Methodology / Metadata
Other information
- Regulation 808/2004 concerning Community statistics on the information society
- Regulation 960/2008 implementing Regulation 808/2004 concerning Community statistics on the information society
- Regulation 1023/2009 implementing Regulation 808/2004 concerning Community statistics on the information society
- Regulation 821/2010 implementing Regulation 808/2004 concerning Community statistics on the information society
- Regulation 937/2011 implementing Regulation 808/2004 concerning Community statistics on the information society
- Regulation 1083/2012 implementing Regulation 808/2004 concerning Community statistics on the information society
- Regulation 696/1993 of 15 March 1993 on the statistical units for the observation and analysis of the production system in the Community