An Empirical Study of the Telecommunications Service Industries Using Productivity Decomposition

Telecommunications service industry provides services that transmit voice, data, text, sound, video, and other signals. In the Internet age, the telecommunications service industry has experienced tremendous growth to form an indispensable infrastructure platform for today's global networked economy. In this study, we examine the output performance of telecommunications service industries in 13 Organization of Economic Cooperation and Development countries from 2000 to 2011 using the Malmquist total factor productivity index (MTFPI) as the performance metric and data envelopment analysis as the measurement approach. We further decompose MTFPI into three factors: 1) technical change; 2) pure efficiency change; and 3) scale efficiency change, that represent innovation, catch-up, and demand fluctuation, respectively. The results show that these telecommunications service industries exhibit comparatively strong productivity growth. In addition, through our decomposition analysis, it is found that telecommunications service industry is an innovator skilled at adopting technological advances that turn out to be the key driving force for the observed productivity growth. By contrast, both pure efficiency change and scale efficiency change lead to negative impacts. Based on these findings, we draw and discuss implications for telecommunications service at the country and industry levels, and provide suggestions for practice and future research.