The changing returns on IT investment
Industrial Management & Data Systems
ISSN: 0263-5577
Article publication date: 2 October 2020
Issue publication date: 27 October 2020
Abstract
Purpose
Prior IT productivity research usually assumes constant returns on IT investment. This study suggests that the impact of IT investment on productivity may not be constant but may change with the IT investment scale and over time. Specifically, we divide IT investment into commercial IT and in-house IT and investigate their changing impacts on industry labor productivity.
Design/methodology/approach
A model of the productivity impacts of commercial IT and in-house IT with changing effects of scale and over time is developed and empirically tested based on industry-level panel data from the US. Bureau of Economic Analysis (BEA).
Findings
The returns on commercial IT investment increase with scale but decrease over time, while the returns on in-house IT increase over time.
Originality/value
This study provides a new perspective for IT productivity research by investigating the changing productivity impacts of IT investment. It also suggests that commercial IT and in-house IT should be distinguished, as they have different impacts on productivity.
Keywords
Acknowledgements
This research was supported by the National Natural Science Foundation of China (No. 71572180).
Citation
Fang, J., Liu, X. and Qu, W.G. (2020), "The changing returns on IT investment", Industrial Management & Data Systems, Vol. 120 No. 11, pp. 2025-2039. https://doi.org/10.1108/IMDS-04-2020-0234
Publisher
:Emerald Publishing Limited
Copyright © 2020, Emerald Publishing Limited