The use of information communication technologies and firm performance

Information Communication Technologies (ICT) have developed considerably since the first computer was first used in the early 1950s. The widespread use of ICT has reduced both the costs of collecting information and the significance of asymmetric information problems. All these developments have opened new paths for economic growth by increasing productivity in all sectors. Therefore, the impact of ICT on firm performance has attracted the attention of researchers. There are studies examing the impact of ICT on firm performance measured by firm productivity in both manufacturing and service sector in the other economies. However, ICT capital is generally used as the ICT variable in the studies examining the link between ICT and productivity. In addition, there is no study in Turkey investigating the effects of ICT use on firm productivity. For this reason, the purpose of this study is to investigate the impact of ICT use on firm performance, measured as productivity, in the manufacturing industry and service sector at the firm level in Turkey and to determine whether this relationship differs among firms operating in the manufacturing industry and service sectors. For this purpose, a panel data set covering the years 2009-2013 was prepared by using the Statistics of Industry and Services and the Statistics of Information Technology Usage in Enterprises of the Turkish Statistical Institute (TURKSTAT). The impact of the use of ICT on labor productivity was analyzed by using the Random Effects model while its impact on value added was examined by using the Olley-Pakes method. The results of the analysis shows that the use of ICT in firms in both manufacturing industry and service sector have a positive effect on both labor productivity and value added. Keywords: Information and Communication Technologies, ICT, Productivity,Manufacturing industry, Service sector, Turkey