Microsoft Ireland and the Irish Management Institute (IMI) are to jointly develop a national productivity centre which will be based at the IMI campus in Sandyford, Dublin.
The aim of the centre is to help companies to improve their productivity through technology and innovation.
Up to €2 million - a mixture of financial support, technology donations, expert personnel - has been invested in the centre which will open in mid-2007.
Minister for Finance Brian Cowen said the centre was a significant development in Ireland's drive to focus on productivity.
"It is now broadly accepted that the importance of productivity to the economy cannot be underestimated as we seek to maintain our competitiveness on the global economic stage," he said.
Managing Director of Microsoft Ireland Joe Macri said: "There has been a healthy debate on the issue of productivity in the Irish economy over the past eighteen months."
The focus on this issue, at a time when Ireland's costs continue to rise, is to be welcomed and we believe that the combination of the technology tools and management expertise that will be showcased in the National Productivity Centre will be of benefit to managers from both the public and private sector as they seek to increase productivity in their own organisatons."
The IMI's chief executive Tom McCarthy said: "More and more business managers are asking us how they can become more productive and increase their competitiveness in the face of new economic realities.
"Management capability is obviously a key issue that needs to be looked at in this regard and we are delighted to bring our extensive expertise in this area to enhance the overall offering from the National Productivity Centre," he added.