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IT investment and firm performance in U.S. retail trade

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  • Mark Doms
  • Ron S. Jarmin
  • Shawn D. Klimek

Abstract

We examine the relationship between investments in information technology (IT) and two measures of retail firm performance: labor productivity and productivity growth over the 1992 to 1997 period. We use untapped firm and establishment micro data from the Censuses of Retail Trade and the Assets and Expenditures Survey. We show that large firms account for most retail IT investment, employment and establishment growth. We find evidence of a significant relationship between IT investment intensity and productivity growth. We found no evidence of a similar link between IT and growth in the number of establishments operated by retail firms.

Suggested Citation

  • Mark Doms & Ron S. Jarmin & Shawn D. Klimek, 2003. "IT investment and firm performance in U.S. retail trade," Working Paper Series 2003-19, Federal Reserve Bank of San Francisco.
    • Handle: RePEc:fip:fedfwp:2003-19
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    References listed on IDEAS

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    1. Paul Schreyer, 2000. "The Contribution of Information and Communication Technology to Output Growth: A Study of the G7 Countries," OECD Science, Technology and Industry Working Papers 2000/2, OECD Publishing.
    2. John R Baldwin & Ron S Jarmin & Jianmin Tang, 2002. "The Trend to Smaller Producers in Manufacturing in Canada and the U.S," Working Papers 02-06, Center for Economic Studies, U.S. Census Bureau.
    3. Baldwin, John R. Jarmin , Ron S. Tang, Jianmin, 2002. "The Trend to Smaller Producers in Manufacturing: A Canada/U.S. Comparison," Economic Analysis (EA) Research Paper Series 2002003e, Statistics Canada, Analytical Studies Branch.
    4. Olley, G Steven & Pakes, Ariel, 1996. "The Dynamics of Productivity in the Telecommunications Equipment Industry," Econometrica, Econometric Society, vol. 64(6), pages 1263-1297, November.
    5. Stephen D. Oliner & Daniel E. Sichel, 2000. "The Resurgence of Growth in the Late 1990s: Is Information Technology the Story?," Journal of Economic Perspectives, American Economic Association, vol. 14(4), pages 3-22, Fall.
    6. C.J. Krizan & John Haltiwanger & Lucia Foster, 2002. "The Link Between Aggregate and Micro Productivity Growth: Evidence from Retail Trade," Working Papers 02-18, Center for Economic Studies, U.S. Census Bureau.
    7. Mark Doms & Eric J. Bartelsman, 2000. "Understanding Productivity: Lessons from Longitudinal Microdata," Journal of Economic Literature, American Economic Association, vol. 38(3), pages 569-594, September.
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    Cited by:

    1. Eric Bartelsman & Andrea Bassanini & John Haltiwanger & Ron Jarmin & Stefano Scarpetta & Thorsten Schank, 2002. "The Spread of ICT and Productivity Growth: Is Europe Really Lagging Behind in the New Economy?," CEPN Working Papers halshs-00289168, HAL.
    2. Randy A. Becker & John Haltiwanger & Ron S. Jarmin & Shawn D. Klimek & Daniel J. Wilson, 2006. "Micro and Macro Data Integration: The Case of Capital," NBER Chapters, in: A New Architecture for the US National Accounts, pages 541-610, National Bureau of Economic Research, Inc.
    3. C.J. Krizan & John Haltiwanger & Lucia Foster, 2002. "The Link Between Aggregate and Micro Productivity Growth: Evidence from Retail Trade," Working Papers 02-18, Center for Economic Studies, U.S. Census Bureau.
    4. Emek Basker & Pham Hoang Van, 2005. "Putting a Smiley Face on the Dragon: Wal-Mart as Catalyst to U.S.-China Trade," Working Papers 0506, Department of Economics, University of Missouri, revised 07 Oct 2005.
    5. Mark Doms, 2004. "Productivity growth and the retail sector," FRBSF Economic Letter, Federal Reserve Bank of San Francisco, issue dec17.
    6. Haltiwanger, John & Jarmin, Ron & Schank, Thorsten, 2003. "Productivity, investment in ICT and market experimentation: micro evidence from Germany und the US," Discussion Papers 19, Friedrich-Alexander University Erlangen-Nuremberg, Chair of Labour and Regional Economics.
    7. Sampath Rajagopalan, 2013. "Impact of Variety and Distribution System Characteristics on Inventory Levels at U.S. Retailers," Manufacturing & Service Operations Management, INFORMS, vol. 15(2), pages 191-204, May.
    8. Richard Dion & Robert Fay, 2008. "Understanding Productivity: A Review of Recent Technical Research," Discussion Papers 08-3, Bank of Canada.
    9. Garnadt, Niklas, 2017. "The increasing presence of large firms and its consequences for US startup rates," VfS Annual Conference 2017 (Vienna): Alternative Structures for Money and Banking 168091, Verein für Socialpolitik / German Economic Association.

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