Information and Communication Technology and Export Performance of Firms: A Study of Food Processing Industry in India

Abstract

The role of ICT in enhancing the performance of an economy and business enterprises cannot be neglected in the present era of globalization. The use of ICT can be one of the strategic ways or tools for the firm to improve efficiency and performance, which leads to the long-term survival of the firm in the market. Several studies in the context of developed countries have examined the relationship between ICT and firm performance and found a significant relationship between the two. However, there are very few studies that have examined the impact of ICT on firm performance in the case of developing countries, particularly in India. Therefore, the objective of present study is to examine the determinants of investment in ICT and its impact on export performance of food processing firms in the context in India. The study also tries to understand the perceptions of owners or managers of food processing firms about investment in ICT. The sample and data for the study are extracted from a secondary source, namely Prowess Database for a period of seven years from 2012 to 2018. The econometric method, namely generalized method of moment (GMM) is used to identify the significant determinants of investment in ICT and its impact on export performance of food processing firms. The study also adopted a case study method to understand the owners‘/managers‘ perceptions regarding the investment and use of ICT. The result of GMM model shows that the firm‘s previous year investment in ICT, size of the firm, international exposure, labour intensity, capital intensity, and government intervention are the significant factors in determining the investment in ICT. With respect to impact of ICT investment on export performance, the study found no significant relationship between the two. However, it is found that the affiliated firms‘ investment in ICT has significant impact on the export performance of food processing firms. The result also shows that import and adopt (IAT) strategy is one significant factor to improve the export performance of food processing firms in India. Other factors like the age of the firm, capital-labour ratio, research and development intensity, and government intervention are also found to be significant in explaining the export performance of the firms. These result also supported by the findings the case study conducted in the present study.