Technological Efforts, Firm Ownership and Productivity: A Study of Information Technology Service Firms in India

The article presents differences in firm-level total factor productivity in the information technology (IT) service firms in India over the period 2000–2016. It is an attempt to study whether technological efforts contribute to productivity differences in the firms in conjunction with several other firm specific characteristics. Controlling for endogeneity in inputs, the estimation of productivity through semi-parametric techniques indicates considerable heterogeneity in productivity across firm types. Technological efforts of firms have a significant impact on the productivity of IT firms. Both embodied technology imports and in-house R&D contribute to higher productivity. While the Indian firms are observed to be more productive compared to their foreign counterparts, the technological efforts also differ due to ownership factors and that contributes to changes in productivity. JEL: D24, O14, O39