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Productivity and Information Technology: The Elusive Connection

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  • Maryellen R. Kelley

    (H. John Heinz III School of Public Policy and Management, Carnegie Mellon University, Pittsburgh, Pennsylvania 15213-3890)

Abstract

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.

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File URL: http://dx.doi.org/10.1287/mnsc.40.11.1406
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Bibliographic Info

Article provided by INFORMS in its journal Management Science.

Volume (Year): 40 (1994)
Issue (Month): 11 (November)
Pages: 1406-1425

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Handle: RePEc:inm:ormnsc:v:40:y:1994:i:11:p:1406-1425

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Related research

Keywords: productivity; manufacturing performance; production efficiency; technological change; programmable automation; organization of work;

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Cited by:
  1. Fligstein, Neil & Shin, Taek-Jin, 2007. "Shareholder Value and the Transformation of American Industries, 1984-2001," Institute for Research on Labor and Employment, Working Paper Series qt4r16k6j6, Institute of Industrial Relations, UC Berkeley.
  2. Heine, Michelle Lane & Grover, Varun & Malhotra, Manoj K., 2003. "The relationship between technology and performance: a meta-analysis of technology models," Omega, Elsevier, vol. 31(3), pages 189-204, June.
  3. Derek C. Jones & Panu Kalmi & Antti Kauhanen, 2010. "Firm and Employee Effects of an Enterprise Information System: Micro-econometric Evidence," William Davidson Institute Working Papers Series wp992, William Davidson Institute at the University of Michigan.
  4. António Madureira & Nico Baken & Harry Bouwman, 2011. "Value of digital information networks: a holonic framework," Netnomics, Springer, vol. 12(1), pages 1-30, April.
  5. John Laitner & Dmitriy Stolyarov, 2003. "Technological Change and the Stock Market," American Economic Review, American Economic Association, vol. 93(4), pages 1240-1267, September.
  6. Sundarraj, R. P. & Talluri, Srinivas, 2003. "A multi-period optimization model for the procurement of component-based enterprise information technologies," European Journal of Operational Research, Elsevier, vol. 146(2), pages 339-351, April.
  7. Maryellen R. Kelley & Cynthia R. Cook, 1998. "The Institutional Context and Manufacturing Performance: The Case of the U.S. Defense Industrial Network," NBER Working Papers 6460, National Bureau of Economic Research, Inc.
  8. Erik Brynjolfsson & Lorin M. Hitt, 2000. "Beyond Computation: Information Technology, Organizational Transformation and Business Performance," Journal of Economic Perspectives, American Economic Association, vol. 14(4), pages 23-48, Fall.
  9. Martinez-Lorente, Angel R. & Sanchez-Rodriguez, Cristobal & Dewhurst, Frank W., 2004. "The effect of information technologies on TQM: An initial analysis," International Journal of Production Economics, Elsevier, vol. 89(1), pages 77-93, May.
  10. Kelley, Maryellen R. & Arora, Ashish, 1996. "The role of institution-building in US industrial modernization programs," Research Policy, Elsevier, vol. 25(2), pages 265-279, March.
  11. Zand, Fardad & Van Beers, Cees & Van Leeuwen, George, 2011. "Information technology, organizational change and firm productivity: A panel study of complementarity effects and clustering patterns in Manufacturing and Services," MPRA Paper 46469, University Library of Munich, Germany.
  12. Fligstein, Neil & Shin, Taek-Jin, 2005. "Shareholder Value and Changes in American Industries, 1984-2000," Institute for Research on Labor and Employment, Working Paper Series qt82j7915n, Institute of Industrial Relations, UC Berkeley.
  13. Guido Schryen, 2010. "Preserving Knowledge on IS Business Value," Business & Information Systems Engineering, Springer, vol. 2(4), pages 233-244, August.
  14. Ding, Waverly W. & Levin, Sharon G. & Stephan, Paula E. & Winkler, Ann E., 2009. "The Impact of Information Technology on Scientists’ Productivity, Quality and Collaboration Patterns," Institute for Research on Labor and Employment, Working Paper Series qt80n3512q, Institute of Industrial Relations, UC Berkeley.

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