Information Technology Productivity Paradox Research Articles

Research on the Productivity Paradox of Information Technology

The rapid development of new-generation information technology, such as the internet, big data, and artificial intelligence, has shifted the focus of theoretical and commercial attention on whether information technology can increase productivity growth. This paper systematically combs the evolution trend of the productivity paradox of information technology from the macro and micro levels. The findings revealed that there are still no unified conclusions at the macro-level, but it is generally believed that there is no productivity paradox at the micro level. There are some differences between developed and non-developed countries as well as across different industries. Based on the complementary mechanism theory, it is found that information technology forms a complementary effect with human capital, technological innovation, organizational change, and management practice, which can provide ideas for solving the productivity paradox of information technology. Finally, the future research direction for the productivity paradox of information technology is determined from the macro and micro levels.

IT Productivity Paradox pada Perguruan Tinggi Swasta

Pengambilan kebijakan terkait implementasi teknologi informasi pada perguruan tinggi harus disertai dengan komitmen yang didukung oleh analisa mengenai besarnya kontribusi teknologi informasi pada kinerja institusi. Sehingga implementasi tersebut tidak serta merta hanya mengikuti tren yang berlaku, dimana hampir semua perguruan tinggi yang lain telah melakukan implementasi teknologi informasi. Serta menghindari adanya investasi yang sia-sia dikarenakan adanya kesalahan kebijakan dalam implementasi teknologi informasi. Information Technology Productivity Paradox merupakan sebuah perspektif baru dalam bidang tatakelola teknologi informasi untuk mengetahui besarnya kontribusi teknologi informasi pada peningkatan kinerja. Implementasi teknologi informasi selalu melibatkan banyak pihak dan membutuhkan biaya yang cukup besar, sehingga selalu timbul sebuah pertanyaan dalam benak pengambil kebijakan, apakah biaya dan sumberdaya yang dialokasikan untuk implementasi teknologi informasi adalah sebuah investasi yang tepat atau sia-sia. Tujuan penelitian ini adalah mendapatkan sebuah model konseptual tentang variabel yang berperan dalam pengaruh implementasi IT/Teknologi Informasi terhadap peningkatan produktivitas pada perguruan tinggi dengan menggunakan pendekatan secara langsung dan tidak langsung. Diharapkan dengan adanya model ini, pimpinan perguruan tinggi mampu menghindari/meminimalisasi terjadinya kegagalan investasi Teknologi Informasi/ Paradox. Dari hasil penelitian, dapat disimpulkan bahwa sumberdaya TI memiliki pengaruh secara langsung yang lebih signifikan daripada pengaruh secara tidak langsung,

The complementarity of IT and HRM capabilities for competitive performance: a configurational analysis of manufacturing and industrial service SMEs

ABSTRACTBuilding on the resource-based view (RBV) perspective, we analyse the combined effects of two highly-valued organizational resources, namely information technology (IT) capabilities and human resource management (HRM) capabilities, on the competitive performance of small and medium-sized enterprises (SMEs). Three resource configurations are derived from data on 227 SMEs (121 from the manufacturing sector and 106 from the industrial services sector) through a cluster analysis. These resource configurations are labelled IT Capabilities-dominant Configuration (ITC), e-Business Capabilities-dominant Configuration (e-BC), and HRM Capabilities-dominant Configuration (HRC). This last configuration is the best-performing, followed by the e-BC, with the ITC as the worst-performing. The results also show that manufacturing and service firms are very unevenly distributed within HRC and ITC configurations, suggesting notable differences between the two sectors regarding their respective IT and non-IT capability-building. The fact that service SMEs are overwhelmingly represented (93%) in the worst-performing configuration and completely absent (0%) in the most effective configuration while displaying the strongest IT infrastructure capabilities confirms that the IT productivity paradox is aggravated in service SMEs and calls for further research on this issue.

An IT Capability Approach to Informatization Construction of Higer Education Institutions

This paper proposes a new methodology of the infomatization construction of the higher education institutions based on IT capability for solving the information technology (IT) productivity paradox existing in informatization construction of higher education institutions at present. It analyzes the reasons that lead to the IT productivity paradox problem, expounds the factors and influence mechanism of IT capabilities in higher education institutions and proposes a way to improve the IT capability in higher education institutions by importing IT governance framework to make sure that the IT development is consistent with the development strategy of higher education institutions, to maximize the benefit of IT investments, and to take a good care of the accompanying risks occurred in the IT development process. In general, this paper proposes an effective solution to the problem of IT productivity paradox in the informatization construction of higher education institutions at present.

Explaining the inconsistent results of the impact of information technology investments on firm performance

PurposeThe purpose of this paper is to identify potential reasons for inconsistent results of the economic value of information technology (IT) investments. Furthermore, the study aims to develop framework and propositions to explore future opportunities and directions for research that examine the returns on IT investments.Design/methodology/approachThis study conducted a longitudinal analysis of the literature review concerning the impact of IT investments on firm performance to identify the reasons to the so-called “IT productivity paradox” and to explore future opportunities and directions for future research.FindingsThe study provides and discusses the reasons for the inconsistent results in the prior research that examines IT investments payoff and suggested a framework and propositions for future research. Results of prior studies should be interpreted in the context of research questions raised, data used, level of analysis, IT investment measures, firm performance measures, time horizon and industry characteristics.Practical implicationsIT managers and researchers should align IT investments with the environment in which a firm operates and competes and with firm’s business strategies as important determinants of the return on IT investments.Originality/valueUnderstanding the link between firm performance and IT investments assists researchers and practitioners to understand why firms continue to pour enormous resources into IT and, more importantly, specifies the conditions under which firms are likely to achieve competitive advantages from their IT investments.

Design and Construct IT Performance Architecture: Settle the IT Productivity Paradox from Critical Realism

This article conceptualizes Information Technology (IT) performance architecture with dynamic performance process and performance structure, and try to settle the IT productivity paradox from critical realism. Two assessment principles are presented: that IT performance assessment procedures should include in the dynamic implementation process in which IT performance are produced by unique individual enterprises, and that assessments should tap IT systems that are possessed by the individual enterprises being assessed and that causally contribute to their overt implementation experiences and actions. The limitations of traditional IT performance assessment strategies based on between-enterprises performance metrics are discussed inlight of these principles. The article then outlines an alternative strategy in which performance architecture are designed and constructedin dynamic procedure that is sensitive to the potentially idiosyncratic performance of individual enterprise. The authors argue that IT system performance assessment can be considered under the IT performance architecture.

Maturity Level at University Academic Information System Linking it Goals and Business Goal Based on Cobit 4.1

The development of Information Technology (IT) has been mainly discussed nowadays, from the top to the lowest level of society. The application of IT help companies to solve problems and even more, the application of IT has been able to provide business strategic decisions support. Many enterprises decided to allocate large budget on IT implementation where this is in line with increasingly sophisticated expectations from IT. With the assumption that the larger budget on enterprises spent on IT application, the greater the benefits they will receive. Unfortunately, IT implementation does not always give an advantage to the company. There are times when the IT implementation does not give any benefit. This situation is called IT Productivity Paradox. The question is then how IT Productivity Paradox can be prevented. The analysis we will get the significance of the IT processes which is linked to its IT Goal. By knowing the significance of the IT processes, it can be seen which one is the significant process and which one is not to the IT Goal. If the IT process are not significant to the IT Goal, the process does not need to be improved because it has no effect to the IT Goal. This research was conducted to obtain the Maturity Level from each IT process and IT process’s significance to IT Goal. The result of this research is that IT Processes are significant to IT Goal. It can be concluded that IT Productivity Paradox was not occurred.

Antecedents of ERP assimilation and its impact on ERP value: A TOE-based model and empirical test

Drawing on the technology-organization-environment (TOE) framework and prior IT assimilation literature, we develop and test an integrated model of ERP assimilation and value in Chinese firms. We also contrast the strength of the antecedents of ERP assimilation and value across different ownership types. Our empirical results using a survey data showed that relative advantage, complexity, compatibility, top management support, organization fit, financial commitment and competitive pressure are significant predictors for ERP assimilation. We also found that the linkage from ERP assimilation to ERP value is very significant. In addition, the strength of the antecedents of ERP assimilation and value varies dramatically across different firm ownership types. Our study confirms that traditional diffusion of innovation attributes, top management support and competitive pressure are significant during the whole ERP life cycle. Our findings also emphasize and validate the importance of ERP assimilation in improving firm performance, and provide evidence for the continued debate on ERP payoff and information technology productivity paradox. In sum, these findings provide insights into how ERP assimilation and ERP value are influenced by contextual elements, and how the impacts may vary across different ownership types.

Sustainability Evaluation of IT/IS Projects

Sustainability is without doubt one of the most important challenges of our time. How can one develop prosperity without compromising the life of future generations? Companies are integrating concepts of sustainability in their marketing, corporate communications, annual reports and in their actions. Information technology (IT) and information systems (IS) provide organizations with the ability to change and improve business processes to better support sustainable practices. IT/IS evaluation methods should therefore reflect this ability and include criteria for the assessment of sustainability aspects of IT/IS projects. However, IT/IS evaluation methods are today still dominated by the economical perspective that resulted from the infamous IT productivity paradox. This paper aims to broaden the perspective on IT/IS evaluation, by exploring the integration of indicators that reflect the concepts of sustainability into IT/IS evaluation methods. Based on an identification IT/IS evaluation methods and an overview of frameworks for sustainability indicators, an analysis is made of the inclusion of the indicators and principles of sustainability assessment in IT/IS evaluation methods. The analysis will conclude that integrating sustainability considerations in IT/IS evaluation requires far more than a set of additional criteria to be considered.

Information technology (IT) productivity paradox in the 21st century

Purpose – Since the 1970s productivity growth in most economies slowed, while information and communication technology expenditures increased: the “information technology (IT) productivity paradox.” Some researchers reported an end to the paradox, but this is most likely due to IT industry growth approaching the Year 2000 phenomenon. The purpose of this paper is to update IT productivity paradox research. Design/methodology/approach – For comparability this research replicates methods employed by previous studies but employs a two-level approach: first macroeconomic indicators; second labor and multi-factor productivity. Findings – Findings suggest IT investment has high positive correlation with gross domestic product growth, but not labor or multi-factor productivity. This ambiguity suggests the paradox is still poorly understood. Research limitations/implications – The findings are not conclusive; the authors cannot confirm or reject the existence of the productivity paradox. The global recession and banking crisis makes it prudent to wait until recovery before analyzing data from that period. Practical implications – Lack of convincing evidence supporting positive effects from IT investment suggests some firms benefit from IT investment, but not others, and that IT investment has questionable returns. Social implications – Firm level studies might find IT investment benefits some firms, but lack of convincing macroeconomic level evidence of positive effects of IT investment suggests the paradox still exists. Originality/value – This research updates the IT productivity paradox demonstrating the phenomenon is still poorly understood and thus worthy of further study, questioning the benefits of IT investment for industry and national economies.

Evaluating the performance of US manufacturing and service operations in the presence of IT: a Bayesian stochastic production frontier approach

In this paper, we evaluate the performance of US manufacturing and service operations in the presence of information technology (IT) as measured by technical efficiency, using firm-level data from 133 companies over the period from 1999 to 2009. To gain insight into the phenomenon of the ‘IT productivity paradox’, or the history of inconsistent findings in the existing literature, we employ a Bayesian stochastic production frontier approach to model the relationship between performance and technical efficiency at the firm, industry and sector levels. Some results are indicative of a slight advantage of the manufacturing sector over the service sector in terms of technical efficiency and a significant positive contribution of IT-investment to firm output. However, other results do suggest the productivity paradox, because of a lack of any definitive association of high IT investment levels with either high- or low-technical efficiency. Indeed, the findings of this study suggest that the origin of some portion of the IT productivity paradox may exist at the industry level, in that the relationship between extreme levels of IT-investment and extreme levels of technical efficiency appear to work differently in sufficiently different industries.

Investigating and comparing the dynamic patterns of the business value of information technology over time

The long-debated issue of the business value of information technology (IT) to the firm (country) has received a great deal of attention in the literature. But the studies have rarely examined the dynamic patterns of the IT value as measured by the firm’s productive efficiency over time. The objective of this paper is to apply the three-factor constant elasticity of substitution (CES) time-varying stochastic production frontier models and use the same data set as used in several previous studies to investigate the dynamic patterns of IT value over time in connection with the issues of inputs substitution and complement and the productivity paradox. This paper adopts two analytical skills, collective and individual, to analyze the empirical results. Collectively, we find that the dynamic patterns of IT value are closely related to the substitution and complement of three inputs and the IT productivity paradox. Individually, we identify five common dynamic patterns of the IT value measured by productive efficiency and interpret their implications for the productivity paradox as summarized in a two by two matrix of practical applications and strategies. This matrix accounts for four different scenarios of the relationship between the average productive efficiency and the IT productivity paradox, illustrates some practical applications by the analytical results, and provides some business insights and managerial strategies for IT decision makers and PO/IS managers. This represents a new contribution to the understanding of the dynamic influence of IT investments upon the value of IT over time.

The Influence of IT Investment on Business Performance: A Comparative Study of Regression Analysis and Artificial Neural Networks

Due to the considerable advances and tangible benefits of information technology (IT), almost all top-tier firms invest heavily in IT applications. However, the phenomenon of the “IT productivity paradox” prevents firms from investing in IT freely. Despite the number of studies exploring the relationship between IT investment and business performance, the value of IT investment remains difficult to justify. Specifically, evidence of a payoff from massive IT investments is still very limited. Added to the complexity is a wide range of key performance indicators that target different aspects of business performance. According to previous studies, the reasons behind the IT productivity paradox may be a shortage of accurate and timely data, a failure of considering the time-lag effect, and the application of inappropriate data analysis techniques. To address the aforementioned symptoms, this study developed a system to examine the influence of IT investment on two categories of performance indicators, namely cost efficiency and profit effectiveness. Specifically, we collected actual enterprise operating data, applied two different data analysis techniques (i.e., regression analysis and artificial neural networks), and conducted analysis using data collected over a period of four years. The results indicate that: (1) the higher the ratio of maintenance costs, the poorer business performance will be; (2) the higher the ratio of IT investment, the better the business performance and the lower the operating cost will be; (3) we also found that the time lag effects of IT investment on business performance for a period of two to three years; (4) regarding the estimation of the influence of IT investment on business performance, artificial neural networks are superior to regression analysis for their explanatory power.

Impacto dos investimentos em TI no desempenho organizacional de empresas de panificação de minas gerais: estudo multicaso

Motivated by the productivity paradox of information technology (IT) and the little attention given to IT investments in countries with developing economies, this article aims to highlight the impacts of IT investments on organizational performance of bakery companies whose revenues is more than $ 1 million/year. The research is based on microeconomic vision and on processes vision, because it uses economic models to assess impacts of IT investments on organizational performance, on profitability and on productivity. The field study was conducted with three bakers in the state of Minas Gerais, in the period 2003 to 2008. The study has a descriptive and longitudinal approach. The research strategy is multiple case. To investigate the relationship between IT investments and the indicators of profitability and productivity, we used the Kendall test, which showed positive correlation with the index G sales growth rate and ACK - Annual Cost per Keyboard - with the return on sales. The test showed no relationship between the indicators of IT investment and lower cost of operation. The Kruskal-Wallis test was used to compare indicators of IT investment, profitability and productivity of companies participating in the study, showing that firms differ statistically between the indicators ACK and return on sales. The findings indicate that the impact of IT on organizational performance of companies participating in this study appears to be related to individual efforts of each company to alleviate the difficulties arising that the technological solutions implemented. Key words: Information Technology, IT investments, organizational performance.

The IT productivity paradox: Effects of training in audit firms

This study examines the moderating effects of professional training on the relation between information technology (IT) investments and financial performance of audit firms in Taiwan. The organization-level financial performance includes productivity and profitability. Total IT investments are divided into software and hardware expenditures. Empirical results indicate that professional training positively associates with productivity significantly but insignificantly with profitability. IT negatively relates to productivity and profitability. Both productivity and profitability are improved by the interaction between IT and professional training, indicating that professional training mitigates the IT productivity paradox. This study takes training and IT into account simultaneously to empirically examine the moderator role of training in the organizational context in which IT is deployed. Evidences obtained thus contribute information to both IT and human resources management literatures. Taiwanese audit market structure is similar to that of many western countries, empirical results of this study possess global managerial implications.

The IT productivity paradox in health: A stakeholder's perspective

Purpose While information technology (IT) investments in healthcare are higher than ever, there are contradictions in the literature regarding their ability to improve productivity, quality of care and/or healthcare system efficiency. Using theories that can help make sense of these contradictions, we propose a new framework to assess the actual impacts of health information technology (HIT) implementation. Method Following an exhaustive literature review, we build upon the ‘productivity paradox’ and ‘stakeholder’ theories to improve the evaluation of IT impacts in healthcare. Interview data from three case studies of HIT implementation in different hospitals were used to develop our proposed framework. Results The empirical data analysis suggests that it is important: (1) to identify, account for and accurately measure the appropriate impacts (beneficial/adverse, expected/unforeseen effects); (2) to consider the context of implementation; (3) to adopt a multi-level perspective (individual, group and organization); and (4) to take into account the various stakeholders’ perspectives (managers, health professionals and patients). Conclusions An assessment framework was developed to provide general guidance on how to assess HIT impacts. The proposed framework will be useful for researchers and practitioners as it takes into account the underlying reasons for the HIT productivity paradox and identifies the salient outcomes of interest linked to HIT implementation.

Information Technology and Organizational Effectiveness: Re-evaluation of the Radical Transformations 1980-2010

Information Technology and Organizational Effectiveness: Re-evaluation of the Radical Transformations 1980-2010 The idea of this paper is to review and summarize the complex interplay between information technology (IT) and organization in stages that impacted radically both the organizational structure and the evolution of effectiveness and economic performance. We could identify five major stages where the underlying technology, the typical organizational structure, and the criteria of performance or business success changed, increasing the complexity of evaluation models proposed. It seemed that the effectiveness impacts of IT escalated from the individual to the team level, from the organizational to the virtual ecosystem level, and from the corporate to the national or global level. Therefore, the IT productivity paradox could not be refuted until 2003.

Knowledge and Control: A Marxian Perspective on the Productivity Paradox of Information Technology

It has been argued that there is a continued basis for Marxian discourse in the deskilling debate, given the nature of “skilled” labor in the context of the modern microelectronics-based economy. While Marxian discourse continues to emphasize manual labor in the context of an industrial paradigm, most often within the metal-mechanic industry, little has been written on the role played by information technology (IT) in control and rationalization of knowledge work since it was examined by Harry Braverman, Harley Shaiken, and Shoshana Zuboff. Meanwhile, a great deal continues to be written in the management literature on the failure of IT to deliver on its promise of increased productivity. This paper illuminates this issue of the productivity paradox of IT through extension of Marxian economic and social theory, and proposes that much of the failure in IT systems to deliver to their full productive capacity may be rooted in the contradictions of advanced capitalism. It further extends this analysis in the examination of the most recent failure of Enterprise Resource Planning (ERP) systems.

Benchmarking the IT productivity paradox: Recent evidence from the manufacturing sector

The production of information services is modeled using Data Envelopment Analysis (DEA) to assess the impact of information technology (IT) on productivity within the manufacturing sector. The performance issues of interest include: (1) investigating the relationship between resource allocation of IT budgets and costs such as labor (the inputs) to productivities achieved (the outputs); (2) benchmarking the relative IT-business value created in this manufacturing sector. These issues are examined by using performance data collected from Compustat™ databases and Information Week™ (IW) surveys of corporate IT executives. The results show that, through scale efficiencies, even efficient firms can improve their performance by reducing certain investments. Overall characteristics of efficient firms are provided so that other firms may emulate them in an effort to achieve benchmarked performance levels.

IT Business Value Research

Although corporations in the world, especially those in the United States, have spent generously on information technology (IT) and information systems (IS) in recent decades, empirical studies have yielded disappointingly inconsistent findings on the impact of IT investments on firm performance, and the phenomenon of the IT productivity paradox lingers on to this day. A review of the literature on this subject has pointed out several possible reasons underlying such inconsistencies, including data and methodological problems and limitations of research models. Consequently, a process-oriented research model is proposed to mitigate the shortcomings of prior studies. This model incorporates improvements in business process as an independent construct parallel to the capabilities of IT and enterprise systems. Competitive capabilities are included as an intermediate construct to conceptualize the linkage between the independent constructs and the dependent construct of organizational performance. Theories and empirical evidence are drawn from associated management disciplines such as operations management and from a resource-based view of the firm to illustrate and explain that investment in IT and business processes eventually will contribute to organizational performance through the creation and enhancement of competitive capabilities. Finally, the theoretical and managerial implications of this research model are highlighted.