Article ID: | iaor19951598 |
Country: | United States |
Volume: | 40 |
Issue: | 12 |
Start Page Number: | 1628 |
End Page Number: | 1644 |
Publication Date: | Dec 1994 |
Journal: | Management Science |
Authors: | Gurbaxani Vijay, Brynjolfsson Erik, Kambil Ajit, Malone Thomas W. |
Keywords: | computers: information, organization, personnel & manpower planning |
Many changes in the organization of work in the United States since 1975 have been attributed to the increased capabilities and use of information technology (IT) in business. However, few studies have attempted to empirically examine these relationships. The primary goal of this paper is to assess the hypothesis that investments in information technology are at least partially responsible for one important organizational change, the shift of economic activity to smaller firms. The authors examine this hypothesis using industry-level data on IT capital and four measures of firm size, including employees and sales per firm. They find broad evidence that investment in IT is significantly associated with subsequent decreases in the average size of firms. The authors also find that these decreases in firm size are most pronounced two to three years after the IT investment is made.