Committee Members: Dr. Chris Forman (co-chair), Dr. Marco Ceccagnoli (co-chair), Dr. Sabyasachi Mitra, Dr. Eric Overby, Dr. Marius Niculescu

Title: IT-Enabled Business Practices: Empirical Investigations of Productivity and Innovation

Essay 1: Does IT Level the Playing Field for Small Establishments? Evidence from Manufacturing

We examine whether information technology investments benefit from economies of scale. Using U.S. Census non-public microdata, we examine the productivity benefits of IT investments for over 11,000 manufacturing plants over a nine year period. We find evidence that large plants exhibit differential productivity benefits from IT investments relative to smaller plants. These differences are robust to a range of alternative estimators and cannot be explained by cross-sectional variance in firm size, plant and firm age, and position in the supply chain. The results have important implications for small plants that firm-level studies have been unable to reveal.

Essay 2: The Interplay of Information Technology and R&D and its Implications for Innovation

Throughout the innovative process, the management of information flows means ensuring both confidentiality from competitors and availability to collaborators. Heavy investment in R&D signals the need for strong knowledge management capabilities, which can be helped or hindered by investment in information technologies. Thus far, the complementarity or substitutability of IT and R&D is unclear. This study investigates this relationship across industries using Harte-Hanks and Compustat data over the time period 2004-2008. We find that, on average, IT and R&D are substitutes. This result is robust across a number of empirical settings.