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The Contribution of Information Technology to Organizational Productivity: An Exploratory Study Using a Regression Tree
Abstract
As investments in information technology (IT) have continuously increased, identifying the contribution of IT investments has been a major issue of IS research. In this study, we explored the relationship of IT to organizational productivity using a regression tree (RT), a Data Mining technique. Based on a firm-level dataset, our results are consistent with the previous studies in that IT investments make a positive contribution to the firm’s productivity. However, our RT based analysis has revealed additional facts. While IS Labor contributes positively to the firm’s output, Computer Capital, which represents the market value of IT infrastructure, does not. In addition, contribution of IS Labor to organizational productivity is not uniform. When Labor is within a certain range, IS Labor contributes to the firm’s output. Otherwise, the contribution of IS Labor is insignificant. In addition, none of IT contributes in generating the highest value of firm’s productivity. This indicates that IT “Productivity Paradox” still exists.
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