The Return on Information Technology: Who Benefits Most?

Jozef Gerard L Konings, Stijn Vanormelingen, Emmanuel Dhyne, Jeroen Van den Bosch

Research output: Contribution to journalArticlepeer-review

Abstract

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.
Original languageEnglish
JournalInformation Systems Research
Early online dateNov 24 2020
DOIs
Publication statusE-pub ahead of print - Nov 24 2020

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