한국생산성학회

The advent of the 4th industrial revolution through technological innovations such as block chain, cloud computing, big data, internet of things, and artificial intelligence makes expectations and concerns as well. On the one hand, the fourth industrial revolution can cause increasing returns to scale of firms, productivity enhancement and thus economic growth. If technological innovation is complementary to labor, it can result in productivity improvement and create high value-added new products. On the other hand, there are increasing concerns that technological innovation could displace jobs by machines and eventually cause the disappearance of jobs. Technological innovations in the ICT industry may play an essential role in the 4th industrial revolution. Nonetheless, there are not many studies on productivity effects of the innovation activities in the ICT firms. This paper empirically examines the effects of new product innovation and production procedure innovation on productivity in the ICT firms using the 2011 Korean Service Innovation Survey data. In estimating the effects of innovation on labor productivity in the ICT industries, it controls for simultaneity and inconsistency of the innovation variables. Main empirical results are as follows. First, the exogeneity hypothesis of both new service innovation and production process innovation is rejected respectively, meaning that estimation by the simple OLS estimation can produce biased results. Thus, an expansion of innovation activities leads to an increase in labor productivity in the ICT firms and the other way around. Second, all R&D expenditure variables in the ICT firms except SMEs are also found to be statistically significant, implying that R&D investment is main sources of ICT firms’competitiveness and an important factor of firm growth. Third, the labor productivity of the ICT firms is found to be have positive association with process innovation. This means that labor productivity and production efficiency can be improves mainly due to process innovation. However, service innovation has negative association with labor productivity in the ICT service industry. This result is consistent with Hong et al.(2003) and Jung(2011) in that productivity performance in service sector is not that good. Finally, for all non-ICT firms, either large or small, process innovation has the positive effects on labor productivity, implying that process innovation should play an essential role in improvement of productivity efficiency in the service industry.