Abstract
Using novel data covering a sample of businesses representative of the Canadian economy, we show that information technology (IT) investment has led to the removal of managerial layers within organizational hierarchies, and that IT investments and organizational delayering are complementary in improving firm productivity. We also find evidence consistent with the substitution of work planning tasks done by managers with IT, as well as an increase in the allocation of decision rights to managers remaining inside the firm for tasks related to new product development and operations. The results suggest that while IT may substitute some managerial functions within the firm, managers also gain greater responsibility over a broader range of activities critical to organizational performance.
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