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

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  • 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.

Suggested Citation

  • Sang Nguyen & B.K. Atrostic, 2006. "How Businesses Use Information Technology: Insights for Measuring Technology and Productivity," Working Papers 06-15, Center for Economic Studies, U.S. Census Bureau.
  • Handle: RePEc:cen:wpaper:06-15
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    File URL: https://www2.census.gov/ces/wp/2006/CES-WP-06-15.pdf
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    References listed on IDEAS

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    Citations

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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.
    2. Paolo Guerrieri & Sara Bentivegna (ed.), 2011. "The Economic Impact of Digital Technologies," Books, Edward Elgar Publishing, number 14361.
    3. Greenstein, Shane, 2010. "Innovative Conduct in Computing and Internet Markets," Handbook of the Economics of Innovation, Elsevier.

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    Keywords

    Information Technology; E-business Processes; Productivity;

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