Did the Reduction of ICT Investment Due to the 2008 Economic Crisis Affect the Innovation Performance of Firms? An Exploratory Analysis Based on Firm Data for the European Glass, Ceramics, and Cement Industry

Spyros Arvanitis, Euripidis N. Loukis
2015 Social Science Research Network  
In this paper we investigate, first, the characteristics of the firms that reduced their ICT investment due to the 2008 crisis, focusing on the firms' ICT characteristics in terms of the ICT, budget, skills and applications used. The analysis of the ICT characteristics that may influence the likelihood of having reduced ICT investment as a consequence of the crisis is primarily explorative, thus driven by available data and economic intuition. The second research question we examine empirically
more » ... examine empirically refers to the possibility that an economic crisis could affect innovation performance through the ICT investment channel. In connection with this, it is also interesting to analyze the ICT characteristics that are associated with ICT-enabled innovation performance; this is the third research question of this paper. Our study is based on firm data from the glass/ceramics/cement industry in six European countries, which have been collected through the 'e-Business Survey' of the European Union. We find that ICT-related crisis vulnerability correlates positively with decreasing ICT budgets (pro-cyclical investment behaviour), the existence of skill deficits in ICT, the awareness of and interest in new ICT applications that presumably request much additional ICT investment, the exposure to strong price competition and the strong presence in international markets, in which activities have significantly decreased due to the crisis. Further, statistically significant negative relationship between ICT-enabled product innovation and crisis vulnerability (pro-cyclical behaviour) is found only for new products or services that contain ICT components, and are therefore directly affected by crisis-related decreasing product demand.
doi:10.2139/ssrn.2648911 fatcat:ned7tuw4cjfghbckunk7aqaugu