Measuring the value of information technology in technical efficiency with stochastic production frontiers

Benjamin Shao, W. T. Lin

Research output: Contribution to journalArticle

59 Citations (Scopus)

Abstract

With the vast amounts of resources being invested in information technology (IT), the issue of how to measure and manage the impact of IT on organizational performance has received increased attention. Based on the production theory in microeconomics, this paper investigates the relationship between IT investments and technical efficiency in the firm's production process. The application of stochastic production frontiers to a comprehensive firm-level panel data set provides us with empirical evidence that IT has a significantly positive effect on technical efficiency and, hence, contributes to the productivity growth in organizations, claimed by some earlier studies with the same data set. The stochastic production frontiers considered include the popular Cobb-Douglas function and the more flexible translog function. Both specifications of production technology lead to the same conclusion. Managerial implications derived from the empirical results are also presented.

Original languageEnglish (US)
Pages (from-to)447-456
Number of pages10
JournalInformation and Software Technology
Volume43
Issue number7
DOIs
StatePublished - Jun 1 2001

Fingerprint

Information technology
Productivity
Specifications

Keywords

  • Information technology value
  • Stochastic frontiers
  • Technical efficiency

ASJC Scopus subject areas

  • Information Systems
  • Software

Cite this

Measuring the value of information technology in technical efficiency with stochastic production frontiers. / Shao, Benjamin; Lin, W. T.

In: Information and Software Technology, Vol. 43, No. 7, 01.06.2001, p. 447-456.

Research output: Contribution to journalArticle

@article{a7dbf4af51a34cc9b52031378bd811a9,
title = "Measuring the value of information technology in technical efficiency with stochastic production frontiers",
abstract = "With the vast amounts of resources being invested in information technology (IT), the issue of how to measure and manage the impact of IT on organizational performance has received increased attention. Based on the production theory in microeconomics, this paper investigates the relationship between IT investments and technical efficiency in the firm's production process. The application of stochastic production frontiers to a comprehensive firm-level panel data set provides us with empirical evidence that IT has a significantly positive effect on technical efficiency and, hence, contributes to the productivity growth in organizations, claimed by some earlier studies with the same data set. The stochastic production frontiers considered include the popular Cobb-Douglas function and the more flexible translog function. Both specifications of production technology lead to the same conclusion. Managerial implications derived from the empirical results are also presented.",
keywords = "Information technology value, Stochastic frontiers, Technical efficiency",
author = "Benjamin Shao and Lin, {W. T.}",
year = "2001",
month = "6",
day = "1",
doi = "10.1016/S0950-5849(01)00150-1",
language = "English (US)",
volume = "43",
pages = "447--456",
journal = "Information and Software Technology",
issn = "0950-5849",
publisher = "Elsevier",
number = "7",

}

TY - JOUR

T1 - Measuring the value of information technology in technical efficiency with stochastic production frontiers

AU - Shao, Benjamin

AU - Lin, W. T.

PY - 2001/6/1

Y1 - 2001/6/1

N2 - With the vast amounts of resources being invested in information technology (IT), the issue of how to measure and manage the impact of IT on organizational performance has received increased attention. Based on the production theory in microeconomics, this paper investigates the relationship between IT investments and technical efficiency in the firm's production process. The application of stochastic production frontiers to a comprehensive firm-level panel data set provides us with empirical evidence that IT has a significantly positive effect on technical efficiency and, hence, contributes to the productivity growth in organizations, claimed by some earlier studies with the same data set. The stochastic production frontiers considered include the popular Cobb-Douglas function and the more flexible translog function. Both specifications of production technology lead to the same conclusion. Managerial implications derived from the empirical results are also presented.

AB - With the vast amounts of resources being invested in information technology (IT), the issue of how to measure and manage the impact of IT on organizational performance has received increased attention. Based on the production theory in microeconomics, this paper investigates the relationship between IT investments and technical efficiency in the firm's production process. The application of stochastic production frontiers to a comprehensive firm-level panel data set provides us with empirical evidence that IT has a significantly positive effect on technical efficiency and, hence, contributes to the productivity growth in organizations, claimed by some earlier studies with the same data set. The stochastic production frontiers considered include the popular Cobb-Douglas function and the more flexible translog function. Both specifications of production technology lead to the same conclusion. Managerial implications derived from the empirical results are also presented.

KW - Information technology value

KW - Stochastic frontiers

KW - Technical efficiency

UR - http://www.scopus.com/inward/record.url?scp=0035370551&partnerID=8YFLogxK

UR - http://www.scopus.com/inward/citedby.url?scp=0035370551&partnerID=8YFLogxK

U2 - 10.1016/S0950-5849(01)00150-1

DO - 10.1016/S0950-5849(01)00150-1

M3 - Article

AN - SCOPUS:0035370551

VL - 43

SP - 447

EP - 456

JO - Information and Software Technology

JF - Information and Software Technology

SN - 0950-5849

IS - 7

ER -