Drivers of ICT investments in bakery and sugar confectionery processed food sub-sector in India

Abstract

PurposeInformation and communication technology (ICT) is a general-purpose technology, which plays an important role in improving the efficiency of a business firm. Nowadays, investment on ICT has become necessary for every business firm in different sectors of the economy. However, firms need to be very cautious while investing on a particular ICT, which is suitable for their businesses. Thus, it becomes necessary for the firm to understand its internal organizational characteristics to invest better on ICT. Therefore, the objective of the present study is to understand the organizational factors, which influence investment on ICT at the firm level.Design/methodology/approachThe technology–organization–environment (TOE) framework is adopted to understand the organizational factors which influence a firm's ICT investment. The sample for the study is the firms belonging to bakery and sugar confectionery sector, which is one of the important sub-sectors of processed food industry in India. The data for analysis is extracted from a secondary source, namely the Prowess Database. The study uses two-step system GMM, a method of generalized method of moment (GMM), to identify the organizational determinants of ICT investment at the firm level.FindingsThe study finds that previous-year investment on ICT has a significant impact on firms' present-year investment on ICT. The result of the econometric method also shows that firms which are larger, labour-intensive and highly liquidated are the ones investing more on ICT in the present study.Research limitations/implicationsAs mentioned, the study examines the ICT investment determinants of firms belonging to one of the important sub-sectors of processed food industry of the Indian economy. However, the result of the study is not to be generalized since it is related only to a specific industry. Further, the data used in the study is limited by secondary sources and therefore, requires data from primary sources for in-depth investigation of ICT investment determinants at the firm level.Originality/valueThis paper bridges a research gap by examining the determinants of ICT investment of one of the important industry sectors in particular to developing countries. The paper contributes to the growing research on information technology adoption by using factors within the TOE framework to explain a processed food firm's investment on ICT.