Technology, productivity, and organization

The on-coming age of changing technology and knowledge intensification, and its interactions with human values are expected to bring forth fundamental shifts in socioeconomic environment. The paper presents an overview of the dynamics of technological change, a hypothesis on productivity dynamics, and likely shifts in organizational structure. To cope with changes, organizational productivity has to be increasingly governed by human creativity and managerial effectiveness. The structure will be flatter, action-oriented, entrepreneurial, and, above all, flexible. By being organically alive, it will be different from conventional mechanical setups. The future will witness more of flexible manufacturing and flexible management systems and a change of emphasis from “management of technology” to “management of change”, governed by a multiperspective vision. The paper also analyzes major problems likely to be faced by developing countries in getting prepared for the future. In addition to their current focus on technological aspects, the Third World countries have to be seriously concerned about people and organizational issues.     

Technology,productivity, and industry structure

This paper examines the controversy as to the particular firm size or industry structure that is most conducive to innovation. Four major conclusions emerge from the considerations advanced here. First, contrary to the focus of the controversy, the relevant issue is not one of the economic statics. Rather, it is one of technological dynamism. Second, variety is an essential ingredient of innovative activity, which can be sustained only through equivalent variety in firm size and industry structure. Thus, there is no one single optimum firm size or industry structure. Third, the origin of interindustry differences in innovation and productivity growth lies in certain processes of cumulative causation involving a multiplicity of variables rather than any one single factor at the exclusion of all others. In consequence, we find that productivity does not advance in a uniform manner across various industries. Rather, it is characterized by an inherently uneven pattern of growth. Fourth, it is pointless to strive for a balanced growth between various sectors of the economy. Rather, an effective policy is one of deliberately lopsided growth whereby fuller development of progressive industries makes it possible to generate the additional resources required for investment in the backward industries. Finally, while the policy to stimulate technical progress and productivity growth must be formulated in a broader socioeconomic context, its focus ought to be on the internal dynamics of technical change processes.     

Measuring total productivity change

This paper examines several ways of measuring the aggregate rate of technical change: with the aggregate production function; in a disaggregated framework of the multisector model; and with the net social production possibility frontier or the generalized factor price frontier. Conditions under which all three approaches are mutually compatible are determined.     

Technology transfers,foreign investment and productivity spillovers

This paper explores the relationship between foreign direct investment (FDI) and the productivity of host country domestic firms. We rely on a specially designed survey of over 4000 manufacturing firms in Vietnam, and separate out productivity gains along the supply chain (obtained through direct transfers of knowledge/technology between linked firms) from productivity effects through indirect FDI spillovers. In addition to identifying indirect vertical productivity spillovers from FDI, our results show that there are productivity gains associated with direct linkages between foreign-owned and domestic firms along the supply chain not captured by commonly used measures of spillovers. This includes evidence of productivity gains through forward linkages for domestic firms which receive inputs from foreign-owned firms.     

Technological progress,structural change and productivity growth: a comment

In a recent article, Fagerberg [Struct. Change Econ. Dyn. 11 (2000) 393] finds changes in the employment share of the electrical machinery industry to positively impact the manufacturing sector productivity growth. Fagerberg's approach has some methodological drawbacks, however. This note seeks to complement Fagerberg's analysis by estimating the impact of the employment share of technologically progressive industries using a more adequate methodology. Fagerberg's claim that the share of the ‘electronics’ industry positively affects manufacturing is confirmed. However, the size of the impact, and as a consequence the extent of spill-overs, is found to be much smaller than estimated by Fagerberg.     

Convergence in OECD countries: technical change,efficiency and productivity

The aim of this study is to analyse labour productivity convergence in the OECD countries over the period 1975-90. A nonparametric frontier approach is used to calculate the Malmquist productivity index. By breaking it down, the contribution in the growth of labour productivity of technical progress, of changes in efficiency, and of the accumulation of inputs per worker are quantified. Unlike other studies, the results obtained show that technical change has worked against labour productivity convergence, since it has always been greater in the countries with higher labour productivity.     

Human capital in OECD countries: Technical change,efficiency and productivity

The aim of this paper is to analyse the role of human capital in the productivity gains of the OECD countries in the period 1965-90, breaking down the productivity gains into technical change and gains in efficiency. For this purpose we use both a stochastic frontier approach and a non-parametric approach (DEA) and calculate Malmquist indices of productivity. The results obtained indicate the existence of both a level effect (a higher level of human capital raises labour productivity) and a rate effect (a higher level of human capital affects positively the rate of technical change) associated with human capital. The differences among countries in endowments of human capital have worked against labour productivity convergence, since the richer countries, thanks to their greater endowment of human capital, have experienced higher rates of technical change.     

Cost structure,technological change,and productivity growth in the greek banking sector

This paper first empirically investigates the cost structure of the Greek banking sector. Secondly, it provides measures of economies (diseconomies) of scale and quantifies technical change and its sources. Finally, this paper measures total factor productivity growth and identifies its sources. Bank production is presented with two different approaches (the intermediation and the production approach) which are used to specify a translog cost function. The two different translog cost models are estimated through the full information maximum likelihood method of estimation on pooled time series and cross sectional data. The results obtained are not significantly affected by model specification. Both models indicate significant economies of scale and negative annual rates of growth in technical change and in total factor productivity.     

Total factor productivity and the measurement of technological change

Abstract.  TFP is interpreted in the literature in different, mutually contradictory ways. Changes in TFP are shown to measure not technological change, only the super‐normal returns to investing in such change – returns that exceed the full opportunity cost of the activity. Thus, in the limit, technological change can proceed with unchanged TFP. Measuring the effects of technological change instead requires counterfactual estimates. Reasons why changes in TFP are imperfect measures of super normal returns are also studied – reasons connected with the timing of output responses, the treatment of R&D in the national accounts, the omission of resource inputs, and two types of aggregation.     

Total factor productivity change of MENA microfinance institutions: A Malmquist productivity index approach

The main purpose of this paper is to investigate productivity changes of 33 Middle East and North Africa microfinance institutions over the period of 2006–2011 by using the Malmquist productivity index (MPI) method and a balanced panel dataset of 198 observations. The empirical findings indicate that the microfinance industry has reported overall productivity regress in the study period even though all the MENA MFIs have positive TFP growth with the exception of the year 2010–2011. In addition, our study indicates that over the period the Malmquist productivity change experienced by the MENA microfinance industry as a whole has averaged 4.9% annually which was mainly attributed to technical efficiency change. The study reveals also that the industry as a whole has exhibited a decline in technological change (2.9% decrease over the period) and suggested that there has been a deterioration in the performance of the best practicing MFIs. By decomposing the Malmquist index, the result showed that during the study period the MENA MFIs have experienced mainly an increment of pure technical efficiency (improvement in management practices) rather than an improvement in optimum size. Overall, an essential strategic implication for the MENA microfinance industry is that they need to pursue a technological progress in order to meet the dual objectives of reaching many poor people and financial sustainability.     

Technology diffusion,spatial effects and productivity growth in the Chinese provinces

This paper investigates spatial spillover effects of productivity in China. We set up a model in which a Chinese province achieves productivity growth by taking advantage of productivity spillovers from the world frontier and from other Chinese provinces. By using fixed effects and GMM panel data methods, we show that productivity growth in an inland province in China can be partly attributed to productivity spillover effects of other provinces. We also show that provincial human capital plays an important role in determining the magnitude of these spillover effects.     

Long-run technical change and multifactor productivity growth in US manufacturing

This study utilizes a translog cost function to produce econometric estimates of the separate influences of technical change versus scale efficiency in contributing to multifactor productivity growth within the US manufacturing sector. The analysis generates (two-digit) industry-specific parameters that capture the effects of output versus time-related shifts in the cost function over the 1949–1991 period. Thus initial evidence concerning the relative importance of technical progress (versus ‘scale’) cannot be provided as a source of productivity gains within two-digit industries. The parametric estimates of total factor productivity growth are compared with existing Divisia measures to explore the shortcomings of the growth accounting technique. These long-run patterns hold implications for the productivity convergence hypothesis traced to knowledge spillovers between industries.     

Organisational change and the productivity effects of green technology adoption

This study investigates induced productivity effects of firms introducing new environmental technologies. The literature on within-firm organisational change and productivity suggests that firms can achieve higher productivity gains from adopting new technologies if they adapt their organisational structures. Such complementarity effects may be of particular importance for the adoption of greenhouse gas (GHG) abatement technologies. The adoption of these technologies is often induced by public authorities to limit the social costs of climate change, whereas the private returns are much less obvious. This study finds empirical support for complementarity between green technology adoption (either CO₂-reducing or resources and energy efficiency-enhancing technologies) and organisational change. While the sole adoption of green technologies is associated with lower productivity, the simultaneous implementation of green technologies and organisational innovations is not.     

The impacts of membership in multi-hospital systems on cost,productivity growth and technical change

We examine whether affiliation in a multi-hospital system contributes to higher rates of total factor productivity (TFP) growth, technological progress and cost efficiency. With a 1996 to 1999 panel of 248 US hospitals (some are private nonprofit (church-related and other nonprofit) and the remaining are public (government, nonfederal)), empirical results indicate that urban system member hospitals experienced higher rates of both TFP growth and technical progress than the rates of TFP growth and technical progress experienced by urban nonsystem hospitals. Rural system member hospitals experienced smaller rates of both TFP decline and technical regress than the rates of TFP decline and technical regress experienced by rural nonsystem hospitals.     

Agricultural productivity,the real effective exchange rate,and structural change: Some evidence from Africa

Agriculture is thought to play a number of roles in the early development process. All of these roles involve fostering non‐agricultural development, in particular manufacturing. It is argued in this paper that agriculture plays a role that has hitherto been ignored. Specifically, if agricultural labor productivity increases faster than manufacturing labor productivity, the real effective exchange rate will depreciate. This depreciation of real effective exchange rate occurs because in very poor countries agriculture makes up the dominant share of both GDP and employment. The depreciation also makes it easier for a country to expand the production of tradables relative to nontradables, with manufacturing being the main tradable. This proposition, which as agricultural labor productivity increases relative to manufacturing labor productivity the real effective exchange rate depreciates, is tested using data drawn from 10 sub‐Saharan African countries.     

Technology adoption and the impact on average productivity

In this paper, a framework is developed to analyze how the specifications of new technologies and the heterogeneity of micro-units of production affect the input use, the adoption pattern, and the productivity of inputs. It shows that asset-productivity-enhancing (APE) technologies tend to be adopted by micro-units with high-quality assets, while variable-input, efficiency-enhancing (VIEE) technologies tend to be adopted by micro-units with low-quality assets. In both cases, the variable input productivity increases, but the average productivity of the fixed asset may decline in the case of the VIEE technology. The distribution of asset quality and the new technology specifications will therefore determine the impacts of production technology innovations on aggregate behavior and consequently the change in average productivity of the fixed asset.     

Investigating productivity change and hospital size: a nonparametric frontier approach

The study obtains measures of the productive efficiency of ‘larger’ and ‘smaller’ Northern Ireland hospitals during the 1986–92 pre-Trust period. The measures provide insights into how these hospitals were responding to the pressures for increased efficiency prior to Trust status. They also constitute a useful benchmark for evaluating productivity change under the post-1992 Trust status environment. A nonparametric frontier approach is used to measure productivity change and to decompose this into technical change (or shifts in the best practice frontier) and efficiency change (or change in how far a hospital is from the frontier). The latter change in efficiency is also decomposed into changes in scale efficiency, pure technical efficiency and input congestion. The findings indicate that smaller hospitals, starting from a less efficient base, achieved greater productivity gains than larger hospitals over 1986–92. For smaller hospitals, this was due to progressive shifts in the best practice frontier outweighing a substantial decline in efficiency. This decline was found to be due to a deterioration in scale efficiency over the period. The results overall support the current policy view that larger hospitals are more efficient than smaller hospitals in providing health care services.     

Bargaining over productivity and wages when technical change is induced: implications for growth, distribution, and employment

I study a model of growth and income distribution in which workers and firms bargain à la Nash (Econometrica 18(2):155–162, 1950) over wages and productivity gains, taking into account the trade-offs faced by firms in choosing factor-augmenting technologies. The aggregate environment resulting from self-interested, objective function-maximizing decision rules on wages, productivity gains, savings and investment, is described by a two-dimensional dynamical system in the employment rate and output/capital ratio. The economy converges cyclically to a long-run equilibrium involving a Harrod-neutral profile of technical change, a constant rate of employment of labor, and constant input shares. The type of oscillations predicted by the model is qualitatively consistent with the available data on the United States (1963–2003), replicates the dynamics found in earlier models of growth cycles such as Goodwin (A growth cycle, in C.H. Feinstein (ed). Socialism, Capitalism and Economic Growth. Cambridge University Press, Cambridge 1967. Cambridge University Press, Cambridge, 1967); Shah and Desai (Econ J 91:1006–1010, 1981); van der Ploeg (J Macroecon 9:1–12, 1987); Flaschel (J Econ: Zeitschrift für Nationalökonomie 44:63–69, 1984) and Sportelli (J Econ: Zeitschrift für Nationalökonomie 61(1):35–64, 1995), and can be verified numerically in simulations. Institutional change, as captured by variations in workers’ bargaining power, has a positive effect on the long-run rate of growth of output per worker but a negative effect on long-run employment. Economic policy can also affect the growth and distribution pattern through changes in the unemployment compensation, which also have a positive long-run impact on labor productivity growth but a negative long-run impact on employment. In both cases, employment can overshoot its new equilibrium value along the transitional dynamics.     

Technical change and the measurement of productivity in an input-output model

This paper examines the relationship between technical change and partial and total factor productivity measurement in an n-sector input-output economy. The level of productivity is shown to increase if there is technical change and constant final demands. However, the aggregate level of productivity can fall if there is technical change and if final demands alter. The relationship between technical change and productivity is complicated and counterintuitive results can occur. When the rate of growth of productivity is analyzed, it is found that productivity growth can decline when there is technical change and accelerating technical change, even if final demands are constant. Implications for intranational and international productivity comparisons are discussed.     

Rent-seeking,R&D,and productivity

To investigate whether rent-seeking discourages productivity, we consider a third-market model, in which a domestic firm and a foreign firm engage in both Research and Development (R&D) and output competition. We show that the relationship between rent-seeking and productivity depends on two forces. On the one hand, rent-seeking increases the marginal benefit of R&D and encourages productivity. On the other hand, a lower production cost due to R&D enables the government to extract the rent from the firm to a greater extent and discourages the productivity. Which force is dominant depends on the level of corruption or, as an alternative interpretation, the weight the government attaches to political contributions. Unlike the monotonic relationship proposed by the literature, we find a non-monotonic relationship between rent-seeking and productivity.