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Product Differentiation and the Use of Information Technology: New Evidence from the Trucking Industry

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  • Atreya Chakraborty

    ()
    (Brandeis University)

  • Mark Kazarosian

    ()
    (Boston College)

Abstract

Since the mid-1980s many authors have investigated the influence of information technology (IT) on productivity. Until recently there has been no clear evidence that productivity increases as a result of IT spending. This productivity paradox is partly due to the difficulty in correctly identifying outputs, particularly in the service sector such as the trucking industry. Products are often differentiated by quality attributes of the service provided, rather than merely the physical content of the good delivered by motor carriers. A carrier's primary marketing objective, e.g. on-time-performance vs. lowest rate carrier, are precisely what differentiates a trucking firm's service. This paper uses cross-sectional data to show that the use of increasingly sophisticated IT by trucking firms varies depending upon marketing objectives. Our empirical results imply that in order to measure the impact of IT on productivity it is crucial to account for how the firm differentiates its product. We conclude that the productivity paradox can be alleviated if measures of output incorporate firms' marketing objectives.

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Bibliographic Info

Paper provided by Boston College Department of Economics in its series Boston College Working Papers in Economics with number 433.

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Length: 33 pages
Date of creation: 22 Nov 1999
Date of revision:
Handle: RePEc:boc:bocoec:433

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Related research

Keywords: Information Technology; Product Differentiation; Marketing Objectives; Trucking Industry; Productivity;

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  1. Donald Siegel & Zvi Griliches, 1991. "Purchased Services, Outsourcing, Computers, and Productivity in Manufacturing," NBER Working Papers 3678, National Bureau of Economic Research, Inc.
  2. Luigi Zingales, . "Survival of the Fittest or the Fattest? Exit and Financing in the Trucking Industry," CRSP working papers 336, Center for Research in Security Prices, Graduate School of Business, University of Chicago.
  3. Sanjeev Dewan & Chung-ki Min, 1997. "The Substitution of Information Technology for Other Factors of Production: A Firm Level Analysis," Management Science, INFORMS, vol. 43(12), pages 1660-1675, December.
  4. Catherine J. Morrison, 2000. "Assessing The Productivity Of Information Technology Equipment In U.S. Manufacturing Industries," The Review of Economics and Statistics, MIT Press, vol. 79(3), pages 471-481, August.
  5. Thomas N. Hubbard, 1998. "Why Are Process Monitoring Technologies Valuable? The Use of On-Board Information Technology in the Trucking Industry," NBER Working Papers 6482, National Bureau of Economic Research, Inc.
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Cited by:
  1. Edward N. Wolff, 2002. "Productivity, computerization, and skill change," Economic Review, Federal Reserve Bank of Atlanta, issue Q3, pages 63-87.
  2. Gillen, David & Haynes, Matt, 2002. "Public and Private Benefits in Intelligent Transportation Systems/Commercial Vehicle Operations: Electronic Clearance and Supply Chain Management," Institute of Transportation Studies, Research Reports, Working Papers, Proceedings qt8qt8w8kp, Institute of Transportation Studies, UC Berkeley.
  3. George P. Baker & Thomas N. Hubbard, 2000. "Contractibility and Asset Ownership: On-Board Computers and Governance in U.S. Trucking," NBER Working Papers 7634, National Bureau of Economic Research, Inc.

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