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The distinct effects of information technology and communication technology on firm organization

Bloom, Nicholas, Garicano, Luis, Sadun, Raffaella and Van Reenen, John ORCID: 0000-0001-9153-2907 (2014) The distinct effects of information technology and communication technology on firm organization. Management Science, 60 (12). pp. 2859-2885. ISSN 0025-1909

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Identification Number: 10.1287/mnsc.2014.2013


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.

Item Type: Article
Official URL:
Additional Information: © 2014 INFORMS
Divisions: Economics
Centre for Economic Performance
Subjects: H Social Sciences > HD Industries. Land use. Labor > HD28 Management. Industrial Management
H Social Sciences > HE Transportation and Communications
Date Deposited: 30 May 2017 14:39
Last Modified: 21 May 2024 22:12

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