The Distinct Effects of Information Technology and Communication Technology on Firm Organization

Nicholas Bloom, Luis Garicano, Raffaella Sadun and John van Reenen

Management Science, 2014, vol. 60, issue 12, 2859-2885

Abstract: Guided by theories of “management by exception,” we study the impact of information and communication technology on worker and plant manager autonomy and span of control. The theory suggests that information technology is a decentralizing force, whereas communication technology is a centralizing force. Using a new data set of American and European manufacturing firms, we find indeed that better information technologies (enterprise resource planning (ERP) for plant managers and computer-assisted design/computer-assisted manufacturing for production workers) are associated with more autonomy and a wider span of control, whereas technologies that improve communication (like data intranets) decrease autonomy for workers and plant managers. Using instrumental variables (distance from ERP’s place of origin and heterogeneous telecommunication costs arising from regulation) strengthens our results.Data, as supplemental material, are available at http://dx.doi.org/10.1287/mnsc.2014.2013 . This paper was accepted by John List, behavioral economics .

Keywords: organization; delegation; information technology; communication technology; the theory of the firm (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (188)

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Related works:
Working Paper: The distinct effects of Information Technology and Communication Technology on firm organization (2013)
Working Paper: The Distinct Effects of Information Technology and Communication Technology on Firm Organization (2009)
Working Paper: The distinct effects of information technology and communication technology on firm organization (2009)
Working Paper: The distinct effects of Information Technology and Communication Technology on firm organization (2009)
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