Information technology, organisational change and productivity growth

We examine the relationships between productivity growth, IT investment and organisational change using UK firm 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 organisational change is omitted; when organisational change is included the IT returns are greatly reduced, (b) IT and organisational change interact in their effect on productivity growth, (c) non-IT investment and organisational change do not interact in their effect on productivity growth. Some new findings are (a) organisational change is affected by competition; (b) US-owned firms are much more likely to introduce organisational changeorganisational change relative to foreign owned firms who are more likely still relative to UK firms; (c) our predicted measured TFP growth slowdown for firms who are not doing organisational change and/or are in the early stages of IT investment compare well with the macro numbers documenting a UK measured TFP growth slowdown.