Research report: Increasing returns to information technology

Stephan Kudyba, Romesh Diwan

Research output: Contribution to journalArticlepeer-review

75 Scopus citations


This work analyzes firm-level investment in information technology and corresponding productivity through the use of a production function over the period from 1995-1997. The results are then compared to previous studies that utilized similar data and methodologies to compare productivity estimates over time. The analysis indicates that investment in IT enhances productivity over the period in question and has illustrated increasing returns over time. These findings are supported by the corresponding empirical analysis which yielded IT capital coefficients in a production function of (0.12, 0.16, 0.18) and IT flow coefficients in a similar function of (0.17, 0.24, 0.22) for the years 1995, 1996, and 1997, respectively. These results reflect the change in firm output given a one-percent change in the natural log of dollars invested in IT capital and flow, and are statistically significant.

Original languageEnglish (US)
Pages (from-to)104-111
Number of pages8
JournalInformation Systems Research
Issue number1
StatePublished - Mar 2002
Externally publishedYes

All Science Journal Classification (ASJC) codes

  • Management Information Systems
  • Information Systems
  • Computer Networks and Communications
  • Information Systems and Management
  • Library and Information Sciences


  • Efficiency
  • Information Economy
  • Information Technology
  • Innovation
  • Production Function
  • Productivity


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