Information technology's impact on productivity in conventional power plants

Madjid Tavana, Mohammad H. Khakbaz and Mohsen Jafari-Songhori

International Journal of Business Performance Management, 2009, vol. 11, issue 3, 187-202

Abstract: The economy has undergone a profound structural transformation in the last two decades. The Information Technology (IT) revolution has expanded well beyond the cutting-edge high-tech sector redefining the rules of global competition. In general, a direct correlation between IT spending and organisational productivity (often referred to as the 'productivity paradox') has been very elusive. Numerous studies have been undertaken to either explain or dispel this paradox. While findings from earlier studies have been conflicting, recent firm-level studies indicate that IT investment has a positive impact on productivity. Data Envelopment Analysis (DEA) has been widely used to evaluate the comparative efficiencies of production processes. We propose a two-stage DEA model to decompose the IT investment impacts on productivity in the power plant industry. IT plays an important role in the effective and efficient generation of electricity in conventional power plants. The proposed model allows the integration of production performance and investment performance and provides management with a comprehensive performance evaluation system. We also propose a benchmarking model in conjunction with our DEA model to measure performance against the 'best-in-class'. The data from 20 public conventional power plants in Iran are used to illustrate and validate our model.

Keywords: data envelopment analysis; DEA; information technology; productivity paradox; power plants; Iran; efficiency; electricity generation; production performance; investment performance; performance evaluation. (search for similar items in EconPapers)
Date: 2009
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:ids:ijbpma:v:11:y:2009:i:3:p:187-202

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