The Return on Information Technology: Who Benefits Most? | Zendy

Emmanuël Dhyne | Zendy; Jozef Konings | Zendy; Jeroen Van den Bosch | Zendy; Stijn Vanormelingen | Zendy

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The Return on Information Technology: Who Benefits Most?

Author(s) -

Emmanuël Dhyne,

Jozef Konings,

Jeroen Van den Bosch,

Stijn Vanormelingen

Publication year - 2020

Publication title -

information systems research

Language(s) - English

Resource type - Journals

SCImago Journal Rank - 3.507

H-Index - 159

eISSN - 1526-5536

pISSN - 1047-7047

DOI - 10.1287/isre.2020.0960

Subject(s) - information and communications technology , productivity , business , exploit , transaction cost , product (mathematics) , investment (military) , capital (architecture) , panel data , economics , industrial organization , finance , econometrics , macroeconomics , history , geometry , computer security , mathematics , archaeology , politics , political science , computer science , law

Using a novel comprehensive data set of IT investment at the firm level, we find that a firm investing an additional euro in IT increases value added by 1 euro and 38 cents on average. This marginal product of IT investment increases with firm size and varies across sectors. IT explains about 10% of productivity dispersion across firms. While we find substantial returns of IT at the firm level, such returns are much lower at the aggregate level. This is due to underinvestment in IT (IT capital deepening is low) and misallocation of IT investments.

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