Information Technology, Organisational Change and Productivity Growth: Evidence from UK Firms

Abstract

We examine the relationships between productivity growth, IT investment and organisational change (Δ O) using UK firm panel data. Consistent with the small number of other micro studies we find (a) IT appears to have high returns in a growth accounting sense when Δ O is omitted; when Δ O is included the IT returns are greatly reduced, (b) IT and Δ O interact in their effect on productivity growth, (c) non-IT investment and Δ O do not interact in their effect on productivity growth. Some new findings are (a) Δ O is affected by competition and (b) we also find strong effects on the probability of introducing Δ O from ownership. US-owned firms are much more likely to introduce Δ O relative to foreign owned firms who are more likely still relative to UK firms.Information technology, Productivity growth, Organisational change