Institutional impacts on the development of an IT industry: the Irish experience

Over the last twenty years, Ireland has become a hotbed of software activity. According to the Organization of Economic Cooperation and Development (OECD) Information Technology Outlook 2000, Ireland is the largest exporter of software goods in the world (IDA, 2002). In the past, smaller countries have suffered from economic disadvantage, but with the recent rapid development of IT sectors, a country that is both small geographically as well as demographically may achieve increased per capita levels of IT infrastructure built and used within that country (Dedrick et al., 1995). With a population of fewer than 4 million and producing software sales worth €10,150 billion, €8,500 billion of which is software exports, Ireland’s software industry has experienced significant success in producing and exporting software (IDA, 2002). Ireland’s emergence as an economic ‘Celtic Tiger’ has evolved as a result of Ireland’s openness to the global market and to increased overseas investment. The authors propose a conceptual framework of factors that identify the key facets of national involvement that have impacted this software growth. This study investigates the extent to which institutional influences, such as government policies, have contributed to the evolution and growth of Ireland’s software industry. In order to identify this governmental impact on the Irish software sector, the authors identify four small developed countries that have experienced significant IT industry growth. The varying levels of government intervention in these cases are considered, indicating the importance of national involvement in each of the four IT industries.