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Information technology, organizational change and firm productivity: A panel study of complementarity effects and clustering patterns in Manufacturing and Services

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  • Zand, Fardad
  • Van Beers, Cees
  • Van Leeuwen, George

Abstract

Organizational complementarities are an essential factor in the process of creating business value from information technology (IT) investments. Organizational change (OC) is an important complementarity. This paper investigates complementarities between IT capital and OC initiatives of the firm. It analyzes the productivity impact of different clusters of IT and OC in the manufacturing and services sectors of the economy. Three dimensions of OC are studied: process, structure, and boundary changes. Two distinct econometric approaches are applied to a unique and detailed sample of 32,619 firm-level observations in the Netherlands for the period 1994-2006. The results reveal that the productivity effect of IT significantly increases when technology investments are accompanied by relevant organizational changes. The observed complementarity effects between IT and OC are stronger for services than for manufacturing firms. The effects become stronger if different types of change are combined with each other and form clusters. In contrast to IT capital, non-IT capital and OC exhibit a substitutability relationship. As to another finding of the research, IT seems to play a dual role with respect to change: generating or stimulating it and complementing or supporting it. The first role is more dominant among manufacturing, while the second is among services firms.

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  • Zand, Fardad & Van Beers, Cees & Van Leeuwen, George, 2011. "Information technology, organizational change and firm productivity: A panel study of complementarity effects and clustering patterns in Manufacturing and Services," MPRA Paper 46469, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:46469
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    Cited by:

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    2. Graziella Bonanno, 2016. "ICT and R&D as inputs or efficiency determinants? Analysing Italian manufacturing firms (2007–2009)," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 6(3), pages 383-404, December.
    3. Ganter, Alois & Hecker, Achim, 2013. "Persistence of innovation: Discriminating between types of innovation and sources of state dependence," Research Policy, Elsevier, vol. 42(8), pages 1431-1445.
    4. Adel Ben Khalifa, 2019. "Direct and Complementary Effects of Investment in Knowledge-Based Economy on Innovation Performance in Tunisian Firms," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 10(2), pages 561-589, June.
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    More about this item

    Keywords

    Information Technology; Organizational Change; Firm Productivity; Complementarities; Clusters; Manufacturing; Services.;
    All these keywords.

    JEL classification:

    • D2 - Microeconomics - - Production and Organizations
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior

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