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Information Technology, Organisational Change and Productivity Growth: Evidence from UK Firms

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Author Info
Gustavo Crespi
Chiara Criscuolo
Jonathan Haskel

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Abstract

We examine the relationships between productivity growth, IT investment and organisational change (?O) using UK firm data. Consistent with the small number of other micro studies we find (a) IT appears to have high returns in a growth accounting sense when ?O is omitted; when ?O is included the IT returns are greatly reduced, (b) IT and ?O interact in their effect on productivity growth, (c) non-IT investment and ?O do not interact in their effect on productivity growth. Some new findings are (a) ?O is affected by competition; (b) US-owned firms are much more likely to introduce ?O relative to foreign owned firms who are more likely still relative to UK firms; (c) our predicted measured TFP growth slowdown for firms who are not doing ?O and/or are in the early stages of IT investment compare well with the macro numbers documenting a UK measured TFP growth slowdown.

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Paper provided by Centre for Economic Performance, LSE in its series CEP Discussion Papers with number dp0783.

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Date of creation: Mar 2007
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Handle: RePEc:cep:cepdps:dp0783

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Related research
Keywords: information technology; productivity growth; organisational change;

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Find related papers by JEL classification:
D24 - Microeconomics - - Production and Organizations - - - Production; Capital and Total Factor Productivity; Capacity
E22 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Capital; Investment; Capacity
L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
O31 - Economic Development, Technological Change, and Growth - - Technological Change - - - Innovation and Invention: Processes and Incentives

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  1. Laura Power, 1998. "The Missing Link: Technology, Investment, And Productivity," The Review of Economics and Statistics, MIT Press, vol. 80(2), pages 300-313, May. [Downloadable!] (restricted)
  2. Brent Boning & Casey Ichniowski & Kathryn Shaw, 2001. "Opportunity Counts: Teams and the Effectiveness of Production Incentives," NBER Working Papers 8306, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  3. Edward E. Leamer, 1999. "Effort, Wages, and the International Division of Labor," Journal of Political Economy, University of Chicago Press, vol. 107(6), pages 1127-1162, December. [Downloadable!] (restricted)
    Other versions:
  4. Nicholas Oulton, 1998. "Investment, Capital and Foreign Ownership in UK Manufacturing," NIESR Discussion Papers 141, National Institute of Economic and Social Research. [Downloadable!]
  5. Timothy F. Bresnahan & Erik Brynjolfsson & Lorin M. Hitt, 2002. "Information Technology, Workplace Organization, And The Demand For Skilled Labor: Firm-Level Evidence," The Quarterly Journal of Economics, MIT Press, vol. 117(1), pages 339-376, February. [Downloadable!] (restricted)
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  6. 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!]
    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)
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  8. Brown, Charles & Medoff, James, 1978. "Trade Unions in the Production Process," Journal of Political Economy, University of Chicago Press, vol. 86(3), pages 355-78, June. [Downloadable!] (restricted)
  9. Bresnahan, Timothy F, 1999. "Computerisation and Wage Dispersion: An Analytical Reinterpretation," Economic Journal, Royal Economic Society, vol. 109(456), pages F390-415, June. [Downloadable!] (restricted)
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  10. Casey Ichniowski & Kathryn Shaw, 2003. "Beyond Incentive Pay: Insiders' Estimates of the Value of Complementary Human Resource Management Practices," Journal of Economic Perspectives, American Economic Association, vol. 17(1), pages 155-180, Winter. [Downloadable!] (restricted)
  11. Richard Disney & Jonathan Haskel & Ylva Heden, 2003. "Restructuring and productivity growth in uk manufacturing," Economic Journal, Royal Economic Society, vol. 113(489), pages 666-694, 07. [Downloadable!] (restricted)
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  12. Eve Caroli & John Van Reenen, 2001. "Skill-Biased Organizational Change? Evidence From A Panel Of British And French Establishments," The Quarterly Journal of Economics, MIT Press, vol. 116(4), pages 1449-1492, November. [Downloadable!] (restricted)
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  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!]
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  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)
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