Measuring Technology Gap Using Total Factor Productivity: A Reciprocal Approach

This study adopts the technology gap measurement method proposed by Yang et al. (2018), which defines the technology gap as the ratio of a firm's technology level in year t to the highest technology level observed in its industry. To facilitate interpretation, the reciprocal of this ratio is used, where a larger value represents a smaller technology gap. The technology level itself is determined using the OP method to calculate total factor productivity, providing a comprehensive view of the firm's technological efficiency.