IT spending alone will not raise productivity – MIT

23 April 2002 Investment in IT does boost corporate productivity, but needs to be combined with changes to corporate culture and organisational practices, according to a study by the Massachusetts Institute of Technology (MIT).

The study found a correlation between IT investment and productivity increases, but established that the level of spending on technology per se had little impact. What matters is how systems and equipment are used, it concluded, and this relates to what the authors call ‘organisational capital’.

The ongoing debate about IT investment and productivity gains started in the late 1980s, when PCs became more widely adopted in the enterprise. The study’s authors say that corporate culture and the dominant attitude towards information-related decision-making play a crucial part in determining the effectiveness of corporate IT investments.

Objectives – whether financial or strategic – need to be conveyed to staff on a regular basis. Implementing open communication through IT is vital to maximising IT-related productivity gains. Training and performance-related incentives are also important, say the authors.

The study was based on data collected from 1,167 companies across 41 industries, and is part of a $5 million (€5.63m) project by MIT.

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Ben Rossi

Ben was Vitesse Media's editorial director, leading content creation and editorial strategy across all Vitesse products, including its market-leading B2B and consumer magazines, websites, research and...

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