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How Businesses Use Information Technology: Insights for Measuring Technology and Productivity

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Author Info

  • Sang Nguyen
  • B.K. Atrostic

Abstract

Business use of computers in the United States dates back fifty years. Simply investing in information technology is unlikely to offer a competitive advantage today. Differences in how businesses use that technology should drive differences in economic performance. Our previous research found that one business use – computers linked into networks – is associated with significantly higher labor productivity. In this paper, we extend our analysis with new information about the ways that businesses use their networks. Those data show that businesses conduct a variety of general processes over computer networks, such as order taking, inventory monitoring, and logistics tracking, with considerable heterogeneity among businesses. We find corresponding empirical diversity in the relationship between these on-line processes and productivity, supporting the heterogeneity hypothesis. On-line supply chain activities such as order tracking and logistics have positive and statistically significant productivity impacts, but not processes associated with production, sales, or human resources. The productivity impacts differ by plant age, with higher impacts in new plants. This new information about the ways businesses use information technology yields vital raw material for understanding how using information technology improves economic performance.

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File URL: ftp://ftp2.census.gov/ces/wp/2006/CES-WP-06-15.pdf
File Function: First version, 2006
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Bibliographic Info

Paper provided by Center for Economic Studies, U.S. Census Bureau in its series Working Papers with number 06-15.

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Length: 34 pages
Date of creation: Jun 2006
Date of revision:
Handle: RePEc:cen:wpaper:06-15

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Related research

Keywords: Information Technology; E-business Processes; Productivity;

This paper has been announced in the following NEP Reports:

References

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  1. Robert Mcguckin & Mary Streitwieser & Mark Doms, 1998. "The Effect Of Technology Use On Productivity Growth," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 7(1), pages 1-26.
  2. Kazuyuki Motohashi, 2003. "Firm level analysis of information network use and productivity in Japan," Discussion papers 03021, Research Institute of Economy, Trade and Industry (RIETI).
  3. Sandra E. Black & Lisa M. Lynch, 1997. "How to Compete: The Impact of Workplace Practices and Information Technology on Productivity," NBER Working Papers 6120, National Bureau of Economic Research, Inc.
  4. Erik Brynjolfsson & Lorin M. Hitt, 2003. "Computing Productivity: Firm-Level Evidence," The Review of Economics and Statistics, MIT Press, vol. 85(4), pages 793-808, November.
  5. Sandra E. Black & Lisa M. Lynch, 2005. "Measuring Organizational Capital in the New Economy," NBER Chapters, in: Measuring Capital in the New Economy, pages 205-236 National Bureau of Economic Research, Inc.
  6. Sang Nguyen & B.K. Atrostic, 2005. "Computer Investment, Computer Networks and Productivity," Working Papers 05-01, Center for Economic Studies, U.S. Census Bureau.
  7. Timothy F. Bresnahan & Manuel Trajtenberg, 1995. "General Purpose Technologies "Engines of Growth?"," NBER Working Papers 4148, National Bureau of Economic Research, Inc.
  8. Nathalie Greenan & Jacques Mairesse, 1996. "Computers and Productivity in France: Some Evidence," NBER Working Papers 5836, National Bureau of Economic Research, Inc.
  9. Zvi Griliches & Jacques Mairesse, 1995. "Production Functions: The Search for Identification," Harvard Institute of Economic Research Working Papers 1719, Harvard - Institute of Economic Research.
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  11. 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.
  12. George P. Baker & Thomas N. Hubbard, 2003. "Make Versus Buy in Trucking: Asset Ownership, Job Design, and Information," American Economic Review, American Economic Association, vol. 93(3), pages 551-572, June.
  13. Arulampalam, W. & Robin A. Naylor & Jeremy P. Smith, 2002. "University of Warwick," Royal Economic Society Annual Conference 2002 9, Royal Economic Society.
  14. W. Erwin Diewert & Ann Marie Smith, 1994. "Productivity Measurement for a Distribution Firm," NBER Working Papers 4812, National Bureau of Economic Research, Inc.
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  16. Randy A. Becker & John Haltiwanger, 2006. "Micro and Macro Data Integration: The Case of Capital," NBER Chapters, in: A New Architecture for the U.S. National Accounts, pages 541-610 National Bureau of Economic Research, Inc.
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Cited by:
  1. B. Atrostic, 2008. "Measuring U.S. innovative activity: business data at the U.S. Census Bureau," The Journal of Technology Transfer, Springer, vol. 33(2), pages 153-171, April.

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