Organizational and technological improvements in Canadian firms and organizations, 2004 to 2006

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by Mark Uhrbach

The 2006 Survey of Electronic Commerce and Technology (SECT) included two questions that dealt with the issues of organizational and technological change. This article will examine organizational and technological change in the private and public sectors, providing the first look at these cross-economy data. An upcoming article will explore the relationship between the introduction of significantly improved organizational structures, management techniques, or technology and the training associated with the implementation of these changes.

About this article
Findings
References
About the author

About this article

The Survey of Electronic Commerce and Technology is an annual cross-economy survey that is sent to a sample of approximately 20,000 private firms and public organizations. The full set of estimates on which this article is based are available on the CANSIM module of the Statistics Canada website.

Questions asked in this module were also asked in the 2000 Survey of Electronic Commerce and Technology. Analysis of results from the 2000 survey is available in two papers written by Louise Earl of the Science, Innovation and Electronic Information Division.

An overview of organisational and technological change in the private sector, 1998-2000 (Earl 2002a).

Innovation and change in the public sector: A seeming oxymoron (Earl 2002b).

More information about the Survey of Electronic Commerce and Technology is available here.

Findings

A closer look at organizational change
Technological change: The who and the how

On the 2006 SECT questionnaire, firms and organizations were asked: "During the last three years, 2004 to 2006, did your organization introduce significantly improved organizational structures or implement improved management techniques?”

During the years 2004 to 2006, just over one-third of private firms (35.5%) introduced significantly improved organizational structures or improved management techniques. In contrast, approximately double that proportion of public organizations did so (71.0%).

In the second part of the question, firms and organizations were asked: “During the last three years, 2004 to 2006, did your organization introduce significantly improved technologies? If yes, how did you introduce significantly improved technologies?

• By purchasing off-the-shelf technologies?
• By licensing new technologies?
• By customizing or significantly modifying existing technologies?
• By developing new technologies? (either alone or in conjunction with others)”

Firms were able to select more than one response for how they chose to introduce technology. The introduction of significantly improved technologies is an important measure, as the acquisition rate is one indicator of economic innovation (OECD/Eurostat 1997).

During the three years, 2004 to 2006, approximately four out of ten (42.8%) private firms introduced a significantly improved technology, a result consistent with what was found six years ago when the question was asked previously. Again, public sector organizations were found to be twice as likely to have introduced a significantly improved technology, as approximately eight out of ten (81.8%) organizations did so.

A closer look at organizational change

As mentioned above, just over one-third of private firms introduced significantly improved organizational structures or management techniques during the three years, 2004 to 2006. However, there were variations in the proportion of firms introducing such changes across sectors and across size classes. The nature of such changes may range widely, varying from a shift in resources to a massive change in overall corporate culture.

Large firms of between 100 and 499 employees were more likely (67.9%) to have enacted significantly improved organizational structures or management techniques than their smaller counterparts with less than 100 employees (38.2%). In a large firm, there may be many more opportunities for changes in organizational structure or management techniques because of the sheer volume of staff and presumably, each of these changes are made with the expectation of significant improvements.

Private firms in the goods producing sector (47.1%) were more likely than firms in the services producing sector (34.5%) to have introduced significantly improved organizational structures or management techniques during the three years, 2004 to 2006. This higher rate of introduction may be partly explained by the size of firms. As discussed above, those firms in the goods producing sector tend to be larger than those in the services producing sector. When only firms with over 100 employees are considered, there is no difference between the goods and services sectors in the rate of introduction of significantly improved organizational structures or management techniques.

Technological change: The who and the how

Similar to the pattern observed with organizational change, there were variations in the proportion of firms introducing new technologies across industries. Technological change was influenced by both industry and size effects.

Private firms in the goods producing sector (48.3%) were more likely to have introduced a significantly improved technology than their counterparts in the services producing sector (42.3%). However, once entrepreneurial firms with no employees or firms that rely solely on contract workers are excluded from the estimates, there is no difference between the goods and services producing sectors.

Firms in the information and cultural services sector (71.8%), an intangible service, had a higher proportion of firms that introduced significantly improved technologies than any of the sectors found in the goods related services sector: wholesale trade (45.1%); retail trade (42.4%); and transportation and warehousing (34.5%).

As may be expected, large firms were most likely to introduce significantly improved technologies. Large firms often have the monetary resources available to introduce new technologies and the human resources available to implement them. While about four out of ten (43.6%) private firms with 1 to 99 employees introduced significantly improved technologies, this was the case for seven out of ten (71.4%) private firms with 100 to 499 employees, and for nearly eight out of ten (78.4%) private firms with more than five hundred employees.

This size effect carries over to public sector organizations as well, where six out of ten (61.4%) public organizations with between 1 to 99 employees introduced a significantly improved technology, compared to nine out of ten organizations with over five hundred employees.

Of those firms that introduced a significantly improved technology, seven out of ten (68.6%) did so by purchasing off-the-shelf technology, almost one-quarter (23.1%) did so by licensing, four out of ten (40.2%) customized or significantly modified existing technology, and two out of ten (22.7%) developed a new technology.¹

Larger firms, those with 100 to 499 employees, were more likely to develop new technologies (39.0%) than those firms with 1 to 99 employees (21.4%). Interestingly, there are no differences across size classes in the proportion of firms that introduced new technology by purchasing off-the-shelf. A questionnaire designed to explore further the characteristics of firms that modify existing technology and develop new technology was sent to respondents in the spring of 2008. Results from this survey will be disseminated as part of a larger analytical study on user innovation in the fall of 2008.

A higher proportion of public sector organizations customized or significantly modified existing technologies (52.6%) or developed new technologies (39.3%) than private firms. This could be a result of the tendency of public organizations to be larger than their private counterparts, or could also reflect that more public organizations are able to absorb the risk involved in modifying an existing technology or developing a new one instead of purchasing a proven technology off-the-shelf.

It is not surprising to see that methods requiring a high level of sophistication in the method of introduction were less common among firms. Developing a new technology or customizing an existing technology takes more resources and expertise than simply licensing a technology or purchasing one off-the-shelf. Further analysis and exploration of this topic using data from this questionnaire will be available in an upcoming working paper.

References

Earl, Louise. 2002a. “An overview of organisational and technological change in the private sector, 1998-2000.” SIEID Working Paper Series, Statistics Canada Catalogue no. 88F0006X, no. 9.

Earl, Louise. 2002b. “Innovation and change in the public sector: A seeming oxymoron.” SIEID Working Paper Series, Statistics Canada Catalogue no. 88F0006X, no. 1

OECD/Eurostat. 1997. Oslo Manual–guidelines to interpreting innovation data. 2^nd edition. Paris.

About the author

Mark Uhrbach is with the Manufacturing and Energy Division at Statistics Canada. For more information about this article, please contact sieidinfo@statcan.gc.ca.

Note

1. Note that these estimates do not sum to one hundred percent, as respondents were asked to report all methods that had been used in the previous three years.