Direct and Indirect Impacts of Information Technology Applications on Productivity: A Field Study

Abstract

:Assessing the productivity impact of information technology (IT) applications is an important research problem in electronic commerce and organizational computing in general. We study the impact of a toll collection system introduced in thirty-eight interchanges of the Pennsylvania Turnpike in 1987. We model labor productivity both before and after the new system implementation. In addition to transaction volumes, we include productivity factors in our models to account for differences in technology, labor, and traffic patterns across the turnpike. Our results show that IT may have two types of impact. First, it can directly affect the time to process a transaction. Second, it can indirectly affect the role of a productivity factor. For example, we found that the unfavorable effect of employee turnover on labor productivity diminished with the introduction of the new system because it reduced the learning time for replacement workers.