Assessing the values of EC and IT separately and simultaneously and inputs substitution and complement: The CES-based stochastic frontier approaches

The CES-based one- and two-equation time-varying stochastic production frontier approaches are proposed to resolve four interrelated research issues simultaneously.Six CES-based research models are developed to achieve the research objective.Treating IT as an observed output- or a desired output-affecting variable leads to different conclusions.Evaluating the values of IT and EC separately rather than simultaneously may seriously miscalculate the country's performance.There are a number of practical consequences and implications. The objective of this research is to critically explore four interrelated issues at the country level by evaluating the values of e-commerce (EC) and information technology (IT) both separately and simultaneously; examining the possibilities of complementarity and substitutability phenomena; analyzing the impacts of substitution and complement relations among ordinary capital, ordinary labor, and IT capital on the business values of EC and IT; and revisiting the productivity paradox by using the stochastic frontier approaches, which incorporate the CES production functions. The empirical results imply that it is important to assess the values of EC and IT simultaneously rather than separately.