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IT, productivity and organizational practices: large sample, establishment-level evidence

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Abstract

Our paper uses a large longitudinal survey of establishments to address two questions: Has IT implementation significantly contributed to workplace performance? Do IT implementations have a positive or negative effect on high performance human resource/workplace practices, compensation practices and training? We put forth four main hypotheses and four auxiliary hypotheses. Three of our four main hypotheses were not rejected: that higher use of IT will increase productivity, that higher use of compensation practices will increase productivity, and that increased training will increase productivity. The hypothesis that increased use of workplace practices will increase productivity was neither rejected nor accepted. There was partial support for the hypothesis that increased investment in IT will increase productivity. The remaining three auxiliary hypotheses were rejected: that the interaction between IT and compensation practices should be positive, that the interaction between IT and workplace practices should be positive, that the interaction between IT and training should be positive. The latter findings are puzzling and point to the need for further research into the effects of computer use and generally accepted practices which should increase productivity.

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Notes

  1. As a reviewer pointed out—we are not saying that firm-level results are invalid—merely we believe that in some case large multi-establishment firms that do not rely heavily on IT may see the impact of IT diminished due to aggregation effects.

  2. Since any given firm could have establishments at multiple locations the unit of analysis should be the establishment. Fortunately, the WES is conducted at the establishment level.

  3. The key variables for productivity analysis such as revenues, expenditures on salaries and wages and number of employees are checked by Statistics Canada against the United Enterprise Survey, the Annual Retail and Wholesale Trade Survey and the Census of Manufacturing.

  4. The elasticity indicates the percentage effect on the dependent variable of a 1% increase in the independent variable including the relevant interaction term(s).

  5. However, establishment-level performance data were obtained from 1987 to 1993 by a linkage to the Longitudinal Research Database.

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Acknowledgments

The Research Data Centers Program (http://www.statcan.gc.ca/rdc-cdr/network-reseau-eng.htm) provided access to the establishment-level data in the Workplace and Employee Survey.

Author information

Authors and Affiliations

  1. Department of Management Sciences, University of Waterloo, 200 University Avenue West, Waterloo, ON, N2L 3G1, Canada

    Brian P. Cozzarin

  2. Faculty of Business and Information Technology, University of Ontario Institute of Technology, 2000 Simcoe Street North, Oshawa, ON, L1H 7L7, Canada

    Jennifer C. Percival

Authors
  1. Brian P. Cozzarin
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  2. Jennifer C. Percival
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Correspondence to Brian P. Cozzarin.

Appendices

Appendix A

See Table 8.

Table 8 WES variable definitions
Full size table

Appendix B: variable construction

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Cozzarin, B.P., Percival, J.C. IT, productivity and organizational practices: large sample, establishment-level evidence. Inf Technol Manag 11, 61–76 (2010). https://doi.org/10.1007/s10799-010-0067-0

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