Untitled - socium.ge

6. Why information should influenceproductivityMarshall Van Alstyne and Nathaniel BulkleyProductivity isn’t everything, but in the long run it is almost everything.Paul Krugman (1994)HISTORICAL CONTEXTEconomists have long recognized the importance of productivity: increases inliving standards depend almost entirely on increasing the output a workerproduces with a given amount of input, including time. Historically, sustainedproductivity increases have been associated with the development of technologiesunderlying economic revolutions, such as the steam engine and electricity(David, 1990). In the future, rates of productivity growth will determinewhether living standards rise or fall as Third World economies mature andbaby-boomers retire.In the modern era, productivity growth in most industrialized countriesproceeded at a moderate rate of about 2 percent from 1870 to 1950, increasedto more than 2 percent from 1950 to 1973 and then slowed considerably from1973 to 1993 (Castells, 2000). The combination of a productivity slowdownand rapidly increasing investments in information technology led to the“productivity paradox” of the 1980s and early 1990s (Roach, 1987;Brynjolfsson and Yang, 1996). After controlling for factors such as energy priceshocks and inflation, correlations between information technology investmentsand productivity remained negative or non-existent. On the flip side, in the pastdecade productivity has surged, even after sharp declines in information technologyinvestments (Yang and Brynjolfsson, 2003). A considerable literatureaimed at unraveling the seeming contradictory statistical relationship betweeninformation technology investments and productivity provides context for thischapter.Our inquiry, however, pursues a different course. We focus on explaininghow information management practices influence white-collar productivity.145