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Does the adoption of emerging technologies improve technical efficiency? Evidence from Korean manufacturing SMEs

Won-Sik Hwang () and Ho-Sung Kim ()
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Won-Sik Hwang: Jeonbuk National University
Ho-Sung Kim: Business Administration Department, Korea Army Academy At Yeong - Cheon (KAAY)

Small Business Economics, 2022, vol. 59, issue 2, No 12, 627-643

Abstract: Abstract Despite the proliferation of innovative technologies during the Fourth Industrial Revolution (4IR), there is a severe lack of quantitative and empirical studies that deal with the effectiveness of recently emerging technologies. This study examines the impact of employing core technologies of the 4IR on small and medium enterprises (SMEs). We used the firm-level cross-sectional data on Korean manufacturing SMEs, including the information on technology utilization. The stochastic production frontier estimation with selectivity correction is employed, besides matching technique to obtain unbiased estimates on technology efficiency. The empirical analysis finds that adopting emerging technologies enhances the productivity of SMEs. After observed and unobserved factors are controlled, the technical efficiency of adopters is higher by more than 26% on average, compared to non-adopters. Moreover, if the gap among production frontiers is considered, the difference in productivity would rise further. Additionally, a strategic alliance is a crucial route for SMEs to accept new technologies.

Keywords: Fourth Industrial Revolution; Stochastic production frontier; Propensity score matching; Sample selection; Technical efficiency; C21; D24; O33; C21; D24; L26; O33 (search for similar items in EconPapers)
Date: 2022
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DOI: 10.1007/s11187-021-00554-w

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