Exploring Efficiency and Innovation: An In-depth Analysis of Total Factor Productivity in the IT Sector

Abstract

A detailed examination of Total Factor Productivity (TFP) growth rates and firm-specific dynamics in the Information Technology (IT) industry from 2012 to 2023 illuminates’ efficiency, innovation, and sectoral stability. In this paper, researchers examine TFP growth rates and firm-specific dynamics in the IT industry from 2012 to 2023. The research details TFP growth rates, TFPCH Index, and Coefficient of Variation for each business throughout the same period. We found a complex IT industry with different corporate trajectories. The TFPCH Index shows average productivity levels, and positive TFP growth rates imply sectors productivity increase. The Coefficient of Variation shows the sector's stability and limited volatility. These findings help stakeholders, governments, and industry players understand IT efficiency and innovation dynamics. Recognizing TFP growth rate patterns allows strategic adjustments for sustained growth, enabling focused treatments. As the IT sector remains crucial to the global economy, this report provides a complete grasp of productivity and innovation variables to aid decision-making. Our research helps stakeholders navigate the changing IT landscape, enabling them to capitalise on successful tactics and develop the industry.