Using broadly comparable panel data for German and Dutch firms in services, this paper analyses the importance of ICT capital deepening and innovation for productivity. We employ a model that takes into account that innovation and ICT use may be complementary. The results show that the contribution of ICT-capital deepening is raised when firms combine ICT use and technological innovations on a more permanent basis. Moreover, the joint impact of ICT use and permanent technological innovation on productivity appears to be of the same order of magnitude in the two countries. Nevertheless, the results found for a direct impact of innovation on multi-factor productivity seems to be more robust for Germany than for the Netherlands.
Hempell, Thomas, Henry van der Wiel and George van Leeuwen (2004), ICT, Innovation and Business Performance in Services: Evidence for Germany and the Netherlands , in: Organisation for Economic Co-operation and Development (OECD) (Eds.), OECD, Paris, 131-152