TFP, ICT and absorptive capacities: micro-level evidence from Colombia

This paper explores ICT investment and different types of absorptive capacity (realized and potential) as determinants of micro-level TFP in Colombia from 2008 to 2018. Our empirical output suggests that productivity is positively affected by ICT expenditures as well as by the presence of those IT-related potential absorptive capacities that strengthen knowledge acquisition and assimilation inside the plant: online transactions (e-commerce) and the use of network communication platforms(e-communication). Realized absorptive capacities such as R&D cooperation and marketing expenditures (signaling firms' ability to exploit and transform available information) are found to only induce TFP growth if combined with appropriate IT capabilities: R&D collaboration paired with e-communication and, marketing strategies connected with e-commerce. These results remain robust to various productivity indicators, issues of reverse causality (TFP-ICT link) and even to different IT-related proxies.