Industry Level Supplier-Driven IT Spillovers

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dc.contributor.authorNault, Barrie R
dc.contributor.authorCheng, Zhuo (June)
dc.date.accessioned2015-05-25T21:53:07Z
dc.date.available2015-05-25T21:53:07Z
dc.date.issued2007-08
dc.description*INFORMS: unless published under the open access option, the publisher will provide a specific copy of the paper that can be posted to a web page https://www.informs.org/Find-Research-Publications/INFORMS-Journals/Rights-Permissions#work. Article deposited according to publisher's policy 05/25/2015en_US
dc.description.abstractWe model and estimate the effects to downstream productivity from information technology (IT) investments made upstream. Specifically, we examine how an industry’s productivity is affected by the IT capital stock of its suppliers. These supplier-driven IT spillovers occur because, due to competition in the supplying industry, quality benefits from suppliers’ IT investments can pass downstream. If the output deflators of supplying industries (consequently the intermediate input deflator of the using industries) do not capture the quality improvement from IT, then the output productivity of the supplying industries is mismeasured or misassigned. We develop and empirically test a model capturing these supplier-driven effects using data on 85 manufacturing industries at the three-digit SIC code level. We find that for a 10.5% increase in suppliers’ IT capital, the suppliers’ output increases by 0.63%–0.70%, which is more than covering the cost of the increase in suppliers’ IT capital. In addition, this increase in suppliers’ IT capital increases the average downstream industry’s output by $66–$72 million, thereby confirming substantial supplier-driven IT spillovers downstream. We also infer the magnitude of the measurement error of the price deflator of the intermediate input resulting from the failure to account for IT-related quality improvement, finding that the measured price deflator overestimates the true deflator by approximately 30% at the mean level of IT capital.en_US
dc.identifier.citationCheng, Z., and B.R. Nault, “Industry Level Supplier-Driven IT Spillovers,” Management Science, 53, 8 (August 2007), 1199-1216.en_US
dc.identifier.doihttp://dx.doi.org/10.11575/PRISM/28801
dc.identifier.issn0025-1909
dc.identifier.urihttp://hdl.handle.net/1880/50437
dc.language.isoenen_US
dc.publisherInformsen_US
dc.publisher.corporateUniversity of Calgaryen_US
dc.publisher.departmentManagement Information Systemsen_US
dc.publisher.facultyHaskayne School of Businessen_US
dc.publisher.institutionUniversity of Calgaryen_US
dc.subjectValue of ITen_US
dc.subjectIT investmenten_US
dc.subjectIT qualityen_US
dc.subjectInterorganizational systems (IOSs)en_US
dc.subjectProduction function frameworken_US
dc.subjectinput-output tablesen_US
dc.subjectPrice deflatoren_US
dc.subjectIT contributionen_US
dc.titleIndustry Level Supplier-Driven IT Spilloversen_US
dc.typejournal article
thesis.degree.disciplineManagement Information Systemsen_US
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