Management Strategy, Investment in it, and Productivity
33 Pages Posted: 15 Oct 2008
Date Written: June 1995
Abstract
Previous literature on IT and productivity does not take into account differentorganizational goals and different management strategies for achieving these goals. Butproductivity and ROI relationships can easily differ as organizational goals andmanagement strategies differ. Therefore, we argue, it is no longer appropriate to ask,"Does IT lead to productivity enhancement." or "Is the ROI on IT investments large orsmall or nonexistent? The better question is under what conditions of organizationalclimate and management choice does IT enhanced productivity result.To illustrate the powerful effect of organizational goals and management strategyon IT-productivity relationships, we examine the twenty year history of two of the largestIT users in the world: the Internal Revenue Service and the Social SecurityAdministration. And we find that these two very similar agencies experienced verydifferent results from massive investments in IT despite sharing a similar productionfunction. There is nothing in micro economics however to explain the different strategiespursed by these managers. Instead we must turn to political and sociological models oforganizations to understand the social construction of productivity results.
Suggested Citation: Suggested Citation