Productivity and Information Technology: The Elusive Connection

This study analyzes the effect of information technology on the efficiency of production operations in a specific manufacturing process. Survey data from 584 establishments engaged in the machining process in 21 different industries are used to construct and test an empirical model that takes into account product characteristics, the type of technology (computer-programmable automation or conventionally controlled) machines, the extent of technological change at the plant, process-specific characteristics such as the scale of operations and degree of customization, labor policies, and structural features of the organization of work. The results indicate that there is a significant efficiency advantage from using programmable automation technology and that technological advantages accumulate with experience and with the repeated opportunities for learning associated with large volume and frequent product changes. The most efficient use of this technology occurs in plants with work practices that involve a higher ratio of machines to workers (as in a cellular approach to manufacturing) and allow production workers to perform programming tasks to a greater degree. Unionized plants are also significantly more efficient than non-union plants.