The effect of soft ICT capital on innovation performance of Greek firms

The purpose of this paper is to investigate the effects of four types of “soft” information and communication technologies (ICT) capital related to ICT knowledge and skills (ICT personnel, ICT training of ICT personnel and users, ICT unit) on the innovation performance of Greek firms. Furthermore, the paper compares these effects with the ones of the hard ICT capital and also of four important “traditional” innovation determinants identified from previous research in this area (demand expectation, price and non-price competition, market concentration).

A quantitative methodology has been adopted for investigating the above effects, based on the estimation of regression models. Using data collected through a survey based on a structured questionnaire from 271 Greek firms, innovation models have been estimated, having as independent variables measures of hard ICT capital, the examined four types of soft ICT capital and also the above traditional innovation determinants.

The paper has been concluded that in the innovation averse Greek national context the examined traditional innovation determinants have very low impact on firms’ innovation performance, however, on the contrary both hard ICT capital, and three out of the four examined types of soft ICT capital (ICT personnel, ICT training of ICT personnel and users) have positive impact on both process and product/services innovation. Furthermore, it has been found that the total effect of these three knowledge and skills related types of soft ICT capital on innovation performance is stronger than the effect of the hard ICT capital.

The main limitations of the paper are that it uses simple innovation performance measures (not distinguishing between different types of innovations), and also is based on firm-level data collected from a single country. The paper has interesting implications for future research on the impact of the relation between ICT and innovation, which should not any more neglect the soft ICT capital, but consider various types of both hard and soft ICT capital.

The results of the paper can be useful to firms’ chief information officers and chief executive officers and also to consultants and practitioners interested in maximizing the exploitation of the innovation potential of ICT, in order to understand the hard and soft aspects of ICT that have to be developed for this purpose and optimize firms’ ICT-related investment.

The limited previous empirical literature concerning the effect of ICT on innovation focus on the hard ICT capital (mainly on ICT equipment) and neglect the role of the soft ICT capital. The paper contributes to fill this research gap, by examining the effects of three types of ICT capital, and also – for comparison and regression models’ completeness purposes – of hard ICT capital and of four traditional innovation determinants, on firms’ innovation performance.