IT Adoption and Sustainable Growth of Firms in Different Industries—Are the Benefits Still Expected?

Abstract

This study uses data from the Korea business activity survey panel from 2008 to 2016 to examine the effects on the sustainable growth of firms that initially adopted Information Technology (IT) applications during 2010 to 2012 compared to those that did not. The effects are examined for four years after adoption and divided into areas such as sales, labor productivity, profitability, increases in male and female employment, wages, and exports. Because the effects of IT adoption are known to vary greatly depending on the industry, the manufacturing industry is divided into traditional, medium-tech, and hi-tech manufacturing, and the service industry is divided into the materials service and information service sectors; the effects on each sector are then observed. In addition, the propensity score matching methodology is used to overcome selection bias arising from a simple comparison between firms that began using IT and firms that did not. The results show that, although there was little impact on productivity, there were impacts on sales and employment and large differences were found between the industrial sectors.