ICT, R&D, and Organizational Innovation: Exploring Complementarities in Investment and Production
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Chapter in forthcoming NBER book Measuring and Accounting for Innovation in the 21st Century, Carol Corrado, Jonathan Haskel, Javier Miranda, and Daniel Sichel, organizers
This paper examines whether there are complementarities between investments in ICT, R&D and organizational innovation, and the effects of different investment profiles on total factor productivity growth on Dutch firm-level data. We estimate an integrated model of investment profile adoption and total factor productivity growth. We find that the three investment decisions are complementary, in the sense that investing in one increases the probability of investing in another one because joint investments lead to higher TFP growth than individual investments. ICT earns on average an expected rate of return of 9.7%, followed by 6% to 7% on organizational innovation and a modest 1.4% to 1.8% on R&D in services and manufacturing respectively.