INFORMATION TECHNOLOGY INVESTMENT AND INDUSTRY PRODUCTIVITY

Making investments in new information systems is expected to bring obvious advantages to organizations. However, despite the theoretical implication, existing empirical studies failed to show a clear link from IT investment to profitability. Using multifactor productivity data retrieved from Bureau of Labor Statistics, we conducted panel regression and time series analyses to explore the relationship between IT investment and industry performance. Consistent with past research, our analysis generated mixed results. We found that investments in software helped improve industry performance, whereas investments in computer hardware (and possibly IT services) had a negative effect on industry performance.