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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

Additional information is available for the following registered author(s):

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: http://webserver01.ces.census.gov/index.php/ces/1.00/cespapers?down_key=101755
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File Function: First version, 2006
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Publisher Info
Paper provided by Center for Economic Studies, U.S. Census Bureau in its series Working Papers with number 06-15.

Download reference. The following formats are available: HTML, plain text, BibTeX, RIS (EndNote), ReDIF
Length: 34 pages
Date of creation: Jun 2006
Date of revision:
Handle: RePEc:cen:wpaper:06-15

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Web page: http://www.ces.census.gov

For technical questions regarding this item, or to correct its listing, contact: (Sang V. Nguyen).

Related research
Keywords: Information Technology E-business Processes Productivity

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This paper has been announced in the following NEP Reports: References listed on IDEAS
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    Other versions:
  2. Thomas N. Hubbard, 2003. "Information, Decisions, and Productivity: On-Board Computers and Capacity Utilization in Trucking," American Economic Review, American Economic Association, vol. 93(4), pages 1328-1353, September. [Downloadable!] (restricted)
  3. Greenman, N. & Mairesse, J., 1996. "Computers and Productivity in France: Some Evidence," Monash Econometrics and Business Statistics Working Papers 15/96, Monash University, Department of Econometrics and Business Statistics.
    Other versions:
  4. 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). [Downloadable!]
    Other versions:
  5. Black, Sandra E. & Lynch, Lisa M., 2005. "Measuring Organizational Capital in the New Economy," IZA Discussion Papers 1524, Institute for the Study of Labor (IZA). [Downloadable!]
  6. Zvi Griliches & Jacques Mairesse, 1995. "Production Functions: The Search for Identification," Harvard Institute of Economic Research Working Papers 1719, Harvard - Institute of Economic Research.
    Other versions:
  7. Sandra E. Black & Lisa M. Lynch, 2001. "How To Compete: The Impact Of Workplace Practices And Information Technology On Productivity," The Review of Economics and Statistics, MIT Press, vol. 83(3), pages 434-445, August. [Downloadable!] (restricted)
    Other versions:
  8. 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. [Downloadable!] (restricted)
  9. Sang Nguyen & B.K. Atrostic, 2005. "Computer Investment, Computer Networks and Productivity," Working Papers 05-01, Center for Economic Studies, U.S. Census Bureau. [Downloadable!]
  10. Randy Becker & John Haltiwanger & Ron Jarmin & Shawn Klimek & Dan Wilson, 2005. "Micro and Macro Data Integration: The Case of Capital," Working Papers 05-02, Center for Economic Studies, U.S. Census Bureau. [Downloadable!]
  11. Doms, Mark & Dunne, Timothy & Troske, Kenneth R, 1997. "Workers, Wages, and Technology," The Quarterly Journal of Economics, MIT Press, vol. 112(1), pages 253-90, February.
  12. Timothy Dunne, 1994. "Plant Age and Technology Use in US. Manufacturing Industries," RAND Journal of Economics, The RAND Corporation, vol. 25(3), pages 488-499, Autumn. [Downloadable!] (restricted)
  13. Brynjolfsson, Erik & Hitt, Lorin M., 2004. "Computing Productivity: Firm-Level Evidence," Working papers 4210-01, Massachusetts Institute of Technology (MIT), Sloan School of Management. [Downloadable!]
    Other versions:
  14. 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. [Downloadable!] (restricted)
  15. W. Erwin Diewert & Ann Marie Smith, 1994. "Productivity Measurement for a Distribution Firm," NBER Working Papers 4812, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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