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Evaluating the impact of IT investments on productivity: a causal analysis at industry level

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  • Hu, Qing
  • Quan, Jing “Jim”

Abstract

While many studies have shown positive and significant relationships between IT investments and firm productivity or performance, the question of causality remains: do higher IT investments contribute to better performance or does better performance lead to higher IT investments? In this study, we examine the issue of IT investment impact on productivity using Granger causality model with industry level data over a 30-yr period. Our results suggest that a causal relationship exists between IT investments and productivity at the industry level. IT investments contribute to productivity growth in most of the industries in our sample. In addition, we find a feedback relationship from productivity to IT investments, as suggested by some studies. We postulate that the impact of IT investments on productivity is moderated by the interaction of product information intensity and value-chain information intensity.

Suggested Citation

  • Hu, Qing & Quan, Jing “Jim”, 2005. "Evaluating the impact of IT investments on productivity: a causal analysis at industry level," International Journal of Information Management, Elsevier, vol. 25(1), pages 39-53.
    • Handle: RePEc:eee:ininma:v:25:y:2005:i:1:p:39-53
    DOI: 10.1016/j.ijinfomgt.2004.10.006
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    References listed on IDEAS

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    Cited by:

    1. Badri Narayan Rath & Danny Hermawan, 2019. "Do Information And Communication Technologies Foster Economic Growth In Indonesia?," Bulletin of Monetary Economics and Banking, Bank Indonesia, vol. 22(1), pages 103-122, April.
    2. Peng, Jianping & Quan, Jing & Zhang, Guoying & Dubinsky, Alan J., 2016. "Mediation effect of business process and supply chain management capabilities on the impact of IT on firm performance: Evidence from Chinese firms," International Journal of Information Management, Elsevier, vol. 36(1), pages 89-96.
    3. Natallia Pashkevich & Darek M. Haftor, 2020. "Complementarities of Knowledge Worker Productivity: Insights from an Online Experiment of Software Programmers with Innovative Cognitive Style," Contemporary Economics, University of Economics and Human Sciences in Warsaw., vol. 14(2), June.

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