TY - JOUR
T1 - The Return on Information Technology
T2 - Who Benefits Most?
AU - Konings, Jozef Gerard L
AU - Vanormelingen, Stijn
AU - Dhyne, Emmanuel
AU - Van den Bosch, Jeroen
PY - 2020/11/24
Y1 - 2020/11/24
N2 - This paper uses a new microdata set of business-to-business firm-level transactions in Belgium to construct a measure of information and communication technology (ICT) investment at the firm level, which we combine with the income statement of firms to analyze the impact of ICT on productivity. We find that a firm investing an additional euro in ICT increases value added by 1 euro and 35 cents on average. This marginal product of ICT investment increases with firm size and varies across sectors. Although we find substantial returns of ICT at the firm level, such returns are much lower at the aggregate level. This is due to underinvestment in ICT (ICT capital deepening is low) and misallocation of ICT investments.
AB - This paper uses a new microdata set of business-to-business firm-level transactions in Belgium to construct a measure of information and communication technology (ICT) investment at the firm level, which we combine with the income statement of firms to analyze the impact of ICT on productivity. We find that a firm investing an additional euro in ICT increases value added by 1 euro and 35 cents on average. This marginal product of ICT investment increases with firm size and varies across sectors. Although we find substantial returns of ICT at the firm level, such returns are much lower at the aggregate level. This is due to underinvestment in ICT (ICT capital deepening is low) and misallocation of ICT investments.
U2 - https://doi.org/10.1287/isre.2020.0960
DO - https://doi.org/10.1287/isre.2020.0960
M3 - Article
SN - 1047-7047
JO - Information Systems Research
JF - Information Systems Research
ER -