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Impact of Information Technology investments on firm productivity in peripherals countries: The case of Portugal

Author

Listed:
  • António Guerreiro
  • Gertrudes Guerreiro
Abstract
IS/IT investments are seen has having an enormous potential impact on the competitive position of the firm, on its performance, and demand an active and motivated participation of several stakeholder groups. The shortfall of evidence concerning the productivity of IT became known as the ?productivity paradox?. As Robert Solow, the Nobel laureate economist stated ?we see computers everywhere except in the productivity statistics?. An important stream of research conducted all over the world has tried to understand these phenomena, called in the literature as «IS business value» field. However there is a gap in the literature, addressing the Portuguese situation. No empirical work has been done to date in order to understand the impact of Information Technology adoption on the productivity of those firms. Using data from two surveys conducted by the Portuguese National Institute of Statistics (INE), Inquiry to the use of IT by Portuguese companies (IUTIC) and the Inquiry Harmonized to (Portuguese) companies (accounting data), this study relates (using regression analysis) the amounts spent on IT with the financial performance indicator Returns on Equity, as a proxy of firm productivity, of Portuguese companies with more than 250 employees. The aim of this paper is to shed light on the Portuguese situation concerning the impact of IS/IT on the productivity of Portuguese top companies. Empirically, we test the impact of IIT expenditure on firm productivity of a sample of Portuguese large companies. Our results, based on firm-level data on Information Technology expenditure and firm productivity as measured by return on equity (1186 observations) for the years of 2003 and 2004, exhibit a negative impact of IT expenditure on firm productivity, in line with ?productivity paradox? claimants.

Suggested Citation

  • António Guerreiro & Gertrudes Guerreiro, 2015. "Impact of Information Technology investments on firm productivity in peripherals countries: The case of Portugal," ERSA conference papers ersa15p1613, European Regional Science Association.
    • Handle: RePEc:wiw:wiwrsa:ersa15p1613
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    References listed on IDEAS

    as
    1. Will cocks, Leslie, 1992. "It evaluation: Managing the catch 22," European Management Journal, Elsevier, vol. 10(2), pages 220-229, June.
    2. Sherry D. Ryan & Michael S. Gates, 2004. "Inclusion of Social Subsystem Issues in IT Investment Decisions: An Empirical Assessment," Information Resources Management Journal (IRMJ), IGI Global, vol. 17(1), pages 1-18, January.
    3. Cynthia A. Montgomery & Birger Wernerfelt, 1988. "Diversification, Ricardian Rents, and Tobin's q," RAND Journal of Economics, The RAND Corporation, vol. 19(4), pages 623-632, Winter.
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    More about this item

    Keywords

    Information Technology investments; Firm Productivity; Return on Equity;
    All these keywords.

    JEL classification:

    • M10 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - General
    • M15 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - IT Management
    • M20 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - General
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General

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