Controversies of technology convergence within the European Union
| Date | 29 May 2007 |
| Pages | 618-635 |
| DOI | https://doi.org/10.1108/02635570710750390 |
| Published date | 29 May 2007 |
| Author | Egon Žižmond,Matjaž Novak |
| Subject Matter | Economics,Information & knowledge management,Management science & operations |
Controversies of technology
convergence within the
European Union
Egon Z
ˇiz
ˇmond and Matjaz
ˇNovak
Faculty of Management, University of Primorska, Koper, Slovenia
Abstract
Purpose – This paper aims to provide empiricalevidence on technologyconvergence within economies
of the EuropeanUnion which is usable for determiningthe economic growth policyaimed at sustainable
long-run economicgrowth and the convergence of the developmentbetween EU-member states.
Design/methodology/approach – Two different empirical procedures are applied by estimating
the technology convergence within the European Union on Eurostat data set. The first is framework
developed by Dowrick and Nguyen. The second one is the authors’ original contribution to the
methodology which is based on the frontier production functions.
Findings – Significant technology convergence is recognized between 15 old EU-member states and
eight new-member states. However, the technology convergence has obviously not accelerated the
convergence of gross domestic product per labor unit between exposed groups of economies. Technical
inefficiency is recognized as the main source that impedes a spill-over effect of technology
convergence. Following this it is established that in the future more effort should be directed into
elimination of technical inefficiency.
Originality/value – Presented findings can be used to arrange the economic policy measures aimed
at accelerating technology development in case of European Union.
Keywords Technology ledstrategy, Technical services, Transition management,
Economic performance, European Union
Paper type Research paper
Introduction
In the second half of 1990s, managers emphasized the importance of a balanced
approach to managing three strategic variables: quality, technology and total
productivity. The necessity to mitigate the problems caused by exclusive and/or
excessive emphasis on the traditional labor productivity concept and need to balanc e
these three strategic variables form the basis for total productivity management.
The central framework of total productivity management consists of four ongoing
activities: productivity measurement, productivity evaluation, productivity planning
and productivity improvements (Sumanth, 1998). Besides the mentioned four activities,
in the reference literature especially five additional segments of total productivity
management are highlighted: establishment of performance measurement systems,
R&D together with the technology competenc es, information technology and
outsourcing. Ju et al. (2005) analyzed the contingency model for technology alliances,
Gonza
´lez-Alvarez and Nieto-Antolin (2005) provided an in-depth analysis on internal
technology transfer and the role of causal ambiguity, and Huang and Lin (2006)
analyzed how R&D management practice affects innovation performance that is due to
the modern growth theory one of the main sources of sustainable long-term growth.
Phusavat and Photaranon (2006), Garacia-Morales et al. (2006), and Rao (2006)
The current issue and full text archive of this journal is available at
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IMDS
107,5
618
Industrial Management & Data
Systems
Vol. 107 No. 5, 2007
pp. 618-635
qEmerald Group Publishing Limited
0263-5577
DOI 10.1108/02635570710750390
provided the discussion on productivity/performance measurement. Furthermore,
Gottschalk and Solli-Sæther (2005) conducted an empirical study on success factors
from IT outsourcing, where Lai et al. (2006) estimated impact of information
technology on the competitive advantage in case of logistic firms.
It is obvious that the total productivity management is the process applied at the
microeconomic level; however, it influences the productivity at the aggregate level.
The aim of this paper is to provide the evidence on aggregate productivity convergence
between 15 old European Union economies (termed as EU15) and eight new member
states (termed as EU8: Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland,
Slovakia and Slovenia).
The content ofthe paper can be divided into fourparts. First, we analyze the extentof
diminishing marginal productivity between EU15 and EU8 economies. In the second
chapter, we describe the methodological framework and data used. The third part is
aimed at conducting an in-depthempirical estimationof technology convergencebetween
selectedgroups of economies,and the paper concludeswith the summaryof main findings.
Issue of real convergence within the European Union
Motivation for providing an in-depth analysis on technology convergence between
EU15 economies and eight new member states (i.e. EU8) occurred as we were
concluding the analysis on the convergence perspective of gross domestic product per
labor-unit between EU8 and EU15 economies. By analyzing the present state-of-the-art
on the convergence issue between EU15 and EU8 economies, we recognize different
tests on conditional convergence of the former transition economies (new member
states) provided for instance by Verblane and Vahter (2005), Estrin and Urga (1997),
Lenain and Rawdanowicz (2004), Sohinger (2005), Alho et al. (2004) that proved the
convergence of gross domestic product per labor-unit with respect to EU15. This is
fully in line with the theoretical expectations since the integration process should bring
to the EU8 economies some important advantages aimed at accelerating the growth of
real gross domestic product per labor-unit. Among all, especially the following factor s
have to be emphasized:
.the EU8 countries (tend to) have free access to the advanced technology of EU15
countries;
.the citizens of EU8 (tend to) have free access to participate in the course of
education in EU15 countries, hence the possible differences in human capital
capabilities between EU8 and EU15 labor force were removed, and finally; and
.because the national legislation of EU8 had to be accommodated to the
legislation of EU15, important institutional differences were removed.
Fundamentally, the removal of barriers to the technology transfer, the restoration of
similar legislation and institutional organization, together with the same capability of
human capital, could only mean prosperity and convergence of real gross domestic
product per labor-unit between EU8 and EU15 economies. Analyzing the official data
on growth of real gross domestic product per labor-unit between EU15 and EU8
economies confirms the expected convergence. However, Crespo-Guaresma et al.
(2002), Vanhoudt (1999), Martı
´n and Vela
´zquez (2001) and Martin and Sanz (2003)
searched for extra effects of EU accession on real convergence between EU15 and new
member states, where no extra effects were recognized.
Controversies of
technology
convergence
619
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