This study examines the contribution of Information and Communication Technology (ICT) to a growth in services. Data at the firm level is employed to investigate how ICT as a key technology, combined with non-technological determinants, can influence firm performance. The study develops an argument that ICT is one of the major success factors at the present time, and this particularly holds true in the case of service firms, primarily due to their fundamental characteristics of interactivity and intensity of information, which are highly compatible with this technology. The results indicate that the presence of ICT explains the higher growth in productivity and profitability experienced by firms in the service industries. Growth in services was also found to be significantly linked to the level of ICT intensity in service firms, especially when this intensity is complemented by organisational change. The impact of ICT on service firms is assessed in detail, while manufacturing firms and other innovation activities serve as benchmarks.
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