Product Differentiation and the Use of Information Technology: New Evidence from the Trucking Industry
AbstractSince 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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Date of creation: Jul 1999
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Other versions of this item:
- Atreya Chakraborty & Mark Kazarosian, 1999. "Product Differentiation and the Use of Information Technology: New Evidence from the Trucking Industry," Boston College Working Papers in Economics 433, Boston College Department of Economics.
- D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
- L21 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Business Objectives of the Firm
This paper has been announced in the following NEP Reports:
- NEP-ALL-1999-07-28 (All new papers)
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