Evaluating the Performance of Investments in IT: Reflections on the Productivity and Profitability Paradox

Elena Beccalli
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Elena Beccalli: London School of Economics

Chapter 3 in IT and European Bank Performance, 2007, pp 42-68 from Palgrave Macmillan

Abstract: Abstract Discussion about the evaluation of the performance of investment in technology was dominated for a long time — and in certain respects still is today — by what Solow (1987) referred to as the “productivity paradox”. Solow sought to examine the relationship between technology and performance by evaluating the various inputs involved in the production function: labour, capital and, in particular, technology. His analysis revealed that the residue of the function — this amount being understood as the measure of the impact of technology — decreased from the mid-1970s onwards, or, in other words, roughly over the same period from the beginning of which investment in technology became increasingly widespread.

Keywords: Gross Domestic Product; Labour Productivity; Service Sector; Banking Industry; Consumer Surplus (search for similar items in EconPapers)
Date: 2007
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Persistent link: https://EconPapers.repec.org/RePEc:pal:pmschp:978-0-230-59198-1_3

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DOI: 10.1057/9780230591981_3

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