IT‐Intensive Machinery and Equipment, Organizational Change and Productivity Growth

The complementarity between investment in machinery and equipment (M&E) with IT and organizational changes for firm productivity growth is studied in this paper. In order to investigate whether this complementarity is a general phenomenon or rather relates to specific sectors, it is necessary to address how this complementarity varies across sectors. The main result is that firms that simultaneously invested in M&E with IT and made organizational changes prior to the financial crisis of 2008 outperformed their less innovative counterparts in the years following the onset of the financial crisis. This suggests that firms should implement changes simultaneously, not one at a time, to obtain higher productivity growth rates. At the sectoral level, this result holds for Manufacturing and Wholesale and Retail trade. Outside these sectors, we are not able to find any additional growth effect for firms that simultaneously invested in M&E with IT and made organizational changes