The Effect of Firm's Use from Information Technology (IT) on Total Productivity

Abstract

Abstract O ur basic aim in this paper concerns the question that if overusing the Information Technology by service and manufacturing firms can increase the total productivity resulting from this kind of technology regarding the Iran's economic structure and conditions. For this purpose, we primarily evaluate the productivity resulting from the rate of firms' use of IT for the different firms. To do this, we use Data Envelopment Analysis model and DEAP software. This model's inputs and outputs involve the rate of firms' use of IT and parameters of their performance, respectively. Next step, we divide different firms into three groups (based on the percent of spent costs on their Information Technology as firms with high, medium and low investment on IT, respectively). Then we analyze how the rate of IT spent costs effect on firms' productivity by KW test. The results of these analyses show that when the rate of IT investments in firms is medium, increasing this kind of investment to high level of IT capital can decrease the productivity of the mentioned firms significantly. But when the rate of IT's initial investment is low, any increasing of IT's investment up to medium and high level won't effect on firms' productivity significantly.