Technology leads to better business growth: StatsCan

OTTAWA — A new Stats Canada report has found robust evidence of a close link between the growth of productivity in Canadian businesses and the use of advanced technologies.

“Over the last 40 years, dramatic changes have taken place in the composition of investment in the Canadian economy, as investment has shifted towards advanced information and communications technologies (ICT),” states a synopsis of the report, titled “Innovation Capabilities: Technology Use, Productivity Growth and Business Performance: Evidence from Canadian Technology Surveys.”

The growth rates of ICT capital services have consistently eclipsed those associated with other forms of investment, such as non-ICT machinery and equipment, engineering structures, building structures, land and inventories.

StatsCan’s studies have found that changes in the relative productivity and market share of manufacturing plants reflect differences in technology use after other factors related to plant performance — such as investments in innovation and overall capital intensity — are taken into account.

“Advanced communications technologies warrant special emphasis, as the use of these technologies was shown to be closely associated with changes in productivity,” the agency found.

“These studies also suggest that the adoption of advanced technology involves a continual process of learning — one that requires substantial investments in developing the skills required to support new production methods.”

More intensive users of technology often report facing more barriers to technology adoption than do non-intensive users, says the study, probably because intensive users have chosen a strategic path that requires more problems to be solved. But businesses that are able to overcome the difficulties associated with technology adoption are often rewarded with improvements in productivity relative to their peers, along with gains in market share.

Communications technologies were shown to be an integral part of more comprehensive strategies in which different types of advanced manufacturing technologies are combined with one another. These comprehensive strategies were associated with stronger productivity gains.

The research paper (11-622-MIE2007016, free) part of The Canadian Economy in Transition series, is now available from the Publications module of StatsCan’s website.