The “Solow paradox mystery” of information security standardization construction and labor investment efficiency: Empirical evidence based on ISO27001 certification

Hongyan Huang, Yeming Sang and Rui Huang

International Review of Financial Analysis, 2025, vol. 102, issue C

Abstract: The “Solow Paradox” describes the paradox of rapid expansion of IT investment and slow growth of productivity, which largely arises from ineffective IT investment management. As an important practice of IT management, can information security standardization overcome the “Solow Paradox”? Based on the unique data collected manually on ISO 270001 information security certification, we find that information security standardization construction significantly improves firms' labor investment efficiency, both for underinvestment and overinvestment. Promoting the upgrading of human capital structure, enhancing the stability of supply chain, and improving the quality of internal control are proven to be three crucial mechanisms. Further research finds that the effect is more significant for knowledge-intensive firms and firms with lower labor adjustment costs. We provide a theoretical basis for promoting information security standardization from a human capital perspective.

Keywords: Information security standardization construction; Labor investment efficiency; ISO27001 certification; Solow paradox (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finana:v:102:y:2025:i:c:s1057521925000997

DOI: 10.1016/j.irfa.2025.104012

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