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Chang, Young Bong
School of Business Administration
Research Interests
  • Economics of Information Systems Information Technology

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The Impact of IT-Related Spillovers on Long-Run Productivity: An Empirical Analysis

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Title
The Impact of IT-Related Spillovers on Long-Run Productivity: An Empirical Analysis
Author
Chang, Young BongGurbaxani, Vijay
Keywords
Business value of it; Economics of is; Empirical analysis; It intensities; IT productivity; Productivity improvements; Services sectors; Spillovers
Issue Date
2012-09
Publisher
INFORMS
Citation
INFORMATION SYSTEMS RESEARCH, v.23, no.3, pp.868 - 886
Abstract
This paper examines the effects of IT-related spillovers on firm-level productivity improvements over a long-term horizon. In contrast, prior research has largely focused on the direct and contemporaneous impacts of IT investments. As a result, we do not fully understand how IT investments are associated with ongoing productivity improvements in future periods and how spillovers influence these gains. In this paper, we examine whether firms receive incremental benefits from IT-related spillovers and whether these spillovers lead to more persistent returns. We focus on the spillovers that accrue to firms from their interindustry transactions, especially the IT services industry. We model and estimate the impact of spillovers on long-run productivity using firm-level data from the manufacturing, transportation, trade, and services sectors. We find that spillover impacts are highly significant, but that the magnitude and persistence of the impacts vary. Firms with high IT intensity receive greater spillover benefits from the IT services industry. Moreover, these benefits are sustained over a long-term horizon. However, the impact of IT-related spillovers does not persist in low IT intensity firms regardless of the source. Overall, our results shed light on the existence and sources of IT-related spillovers and on their important role in shaping the long-run returns to IT investment. Our results also help explain the findings of excess returns to IT investment in the IT productivity literature.
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DOI
10.1287/isre.1110.0381
ISSN
1047-7047
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SBA_Journal Papers
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