Technology (FAT) Survey

FIGURE 1.2 Conceptual Framework for the Firm-level Adoption of Technology (FAT) Survey

Firm-level adoption of technology

General business functions (GBFs) (applied to all firms) Sector-specific business functions (SBFs) (applied to firms in a specific sector)

GBF 1 GBF 2 GBF 3 SBF 1 SBF 2 SBF 3

Technologies B1 Technologies B2

Source: Original figure for this volume. Technologies B3 Technologies C1 Technologies C2 Technologies C3

identify the main business functions, both general and specific to the sector, conducted in firms and the technologies that can be used to perform the key tasks in each of the identified functions (corresponding to “why” firms use a given technology).

The proposed approach normalizes the technology measures by the technology frontier in each business function. Previous measures of technology sophistication focused on sectors—such as Lall (2000), which is widely used in the area of international trade—do not capture the fact that regardless of the sector they are in, some firms are closer to the technology frontier for a particular business function than others. For example, a firm in agriculture in a given country might be much closer to the technology frontier than another firm in manufacturing when considering their respective relevant business functions. By normalizing the technology measures based on the frontier of each business function in each country, this approach allows for the possibility of comparing firms in sectors with different levels of intensity of technology use (technology intensity).

Technology Use across General Business Functions

What are the key business functions and technologies used across GBFs? The exercise conducted with the support of private sector experts has identified seven key general business functions that are common across all firms: business administration (such as accounting, finance, and human resources); production or service operations planning; sourcing and procurement (supply chain management); marketing and product development; sales; payment methods; and quality control. These GBFs have in common the fact that all firms tend to perform them, irrespective of their sector or activity. Figure 1.3 presents the GBFs and the possible technologies that can be used to conduct each of them, identified through the discussions with sector experts.

Evidence from the FAT data suggests that most of the sampled firms tend to rely on manual processes or basic digital technologies to perform these GBFs. Figure 1.4 provides some descriptive statistics from the FAT data to better illustrate the GBF measures.