How Does Information Technology Affect Productivity? Plant-Level Comparisons of Product Innovation, Process Improvement, and Worker Skills

To study the effects of new information technologies (IT) on productivity, we have assembled a unique data set on plants in one narrowly defined industry-valve manufacturing-and analyze several plant-level mechanisms through which IT could promote productivity growth. The empirical analysis reveals...

Full description

Saved in:
Bibliographic Details
Published in:The Quarterly journal of economics 2007-11, Vol.122 (4), p.1721-1758
Main Authors: Bartel, Ann, Ichniowski, Casey, Shaw, Kathryn
Format: Article
Language:English
Subjects:
Building customization
Capital costs
Comparative analysis
Computer technology
Industrial efficiency
Industrial plants
Industrial production
Information technology
Machinery
Production management
Productivity
Run time
Skills
Studies
Technology adoption
Valves
Citations: Items that this one cites
Items that cite this one
Online Access:Get full text
Tags: Add Tag
No Tags, Be the first to tag this record!
Description
Summary:To study the effects of new information technologies (IT) on productivity, we have assembled a unique data set on plants in one narrowly defined industry-valve manufacturing-and analyze several plant-level mechanisms through which IT could promote productivity growth. The empirical analysis reveals three main results. First, plants that adopt new IT-enhanced equipment also shift their business strategies by producing more customized valve products. Second, new IT investments improve the efficiency of all stages of the production process by reducing setup times, run times, and inspection times. The reductions in setup times are theoretically important because they make it less costly to switch production from one product to another and support the change in business strategy to more customized production. Third, adoption of new IT-enhanced capital equipment coincides with increases in the skill requirements of machine operators, notably technical and problem-solving skills, and with the adoption of new human resource practices to support these skills.
ISSN:0033-5533
1531-4650
DOI:10.1162/qjec.2007.122.4.1721