Answers are grounded in this paper and cite their sources.
Information and communication technologies (ICT) are widely regarded as a key driver of innovation and productivity growth; however, empirical evidence on the mechanisms linking ICT, innovation, and firm performance remains limited, particularly in African economies. This study examines the ICT–innovation–productivity nexus in Ethiopia using firm-level panel data from two rounds of the World Bank Enterprise Survey and a generalized structural equation modeling (GSEM) framework. The results provide evidence that ICT adoption enhances firms’ total factor productivity (TFP) primarily through innovation. Specifically, ICT has a positive and statistically significant effect on both product and process innovation, which in turn increase TFP. Process innovation exhibits a slightly stronger productivity effect than product innovation, highlighting the importance of efficiency-enhancing improvements. We also find a direct, albeit smaller, effect of ICT adoption on TFP, indicating that digital technologies influence firm performance both directly and indirectly through innovation. These findings show that, in developing-country contexts, ICT can function as a substitute for formal research and development (R&D) by facilitating access to, adaptation of, and exploitation of external knowledge. From a policy perspective, the results highlight the importance of combining digital infrastructure expansion with investments in innovation capabilities, skills, and organizational upgrading.
No takes yet. Share an insight, caveat, or question.
Keraga et al. (2026) studied this question.
Synapse has enriched 5 closely related papers on similar clinical questions. Consider them for comparative context: