A Study Of The Impact On Productivity Of Chinese Manufacturing Enterprises By Their IT Investment

Currently, with more and more apparent social informatization and economic globalization, to deploy enterprise informatization becomes one of the measures for enterprise reform and development. The development of information technology deeply affects enterprises organizational reform and productivity, which makes it one of the focuses of researchers and management. Theoratical and empirical studies show the existence of productivity paradox of IT investment, and the very mechanism through which IT investment affects enterprise productivity remains unclear.Based on contingency approach and process-transformation model and resources theory, IT investment is divided into four parts:procedure resource, human resource, organizational resource and relationship resource accumulation. The dissertation goes on to discuss the relationship among IT investment and the mechanism IT investment affects enterprise productivity.The transform from IT investment to productivity can be influenced by many factors. Only other factors matching IT investment can the enterprise productivity be improved. The influential factors for IT investment and enterprise productivity can be divided into internal and external factors. The internal influential factors mainly include enterprise management characteristics, employee characterisitics, organization structure, external and internal support for IT applications. The external influential factors mainly include external environment faced by enterprises, such as market competition tension. According to resources theory, enterprise productivity can be improved when enterprise internal and external factors match IT investment and maintain the resource monopoly for IT capability, and IT productivity paradox can be avoided therefor.The dissertation introduces the perspective of enterprise organization transformation, exploring the mechanism of IT investment on manufacturing enterprise, especially the ways through IT investment enhances productivity.The dissertation constructs a transaction cost model and provides an empirical test between IT investment and enterprise productivity. Based on Oliver Williamson’s theory of corporate organization and burearacy, the dissertation studies the impact on corporate organization reform and productivity by IT investment through introducing IT investment variable. IT investment reduces corporate cost and influences productivity in two aspects, namely production cost and management cost. Firstly, on the manufacturing cost, prices of IT products and applications are being lowered by IT development, which boosts IT capital requirement within enterprises. Communication cost and coordinating cost can be reduced and productivity can be improved thereby, which is the direct IT investment impact on productivity. The theoretical model shows IT investment can facilitate enterprise organization reform and reduce buearacy loss and improve organization coordination and productivity thereby.Concerning the empirical tests of IT investment on enterprise productivity in this dissertation, the test results of all regression models testify the obvious impact on the organization reform by IT investment. The empirical tests also testify the main conclusion of the theoretical model, namely IT investment facilitates decentralization of authority in organizations, improves the involvement of employees in the organization operation and improves the basic management and cooperation within organization and productivity therein. But the test result shows IT investment does not have obvious impact on the product innovation and production workflow innovation, which also testify the fact:With the constrains of IT development and application for product design and workflow management, little IT investment was made on product design and production process management before 2005.In this dissertation, indice such as main business income, profit, return on asset, asset turnover and inventory turnover are used to present enterprise productivity. In envaluing IT investment on enterprise productivity, the lagging effects of time are taken into consideration. Statically IT investment has obvious impact on Chinese enterprise productivity in respect of profit, main business revenue and return rate of assets and the results are stable. Moreover, dynamically IT investment has obvious time-lagging impact on enterprise impact, but this lagging effect will gradually be reduced to 0 and can not last long. Meanwhile case studies on IT investment of both XCMG, a leading construction machinery manufacturer and Weichai Power, a leading engine manufacter in China have been made.Finally, in order to help enterprise improve productivity through right IT inverstment, the dissertation makes propsosal for enterprises on IT investment policy and highlights IT strategy and policy shall conform to and support enterprise strategy with detailed road paths to IT strategic planning and implementation thereof.The contributions of this dissertation are:Theoratically and empirically, it proves IT investment could push forward organizational transformation,support a clear workflow, improve the conformity between information-flow and workflow, reduce bureaucratic organization loss, facilitate organizational coordination, increase the level of enterprise decision, which helps to boost enterprise productivity. As for the data being collected and used, because IT investment is a process, the cross-sectional data could not track down the whole process of IT investment, and present the truth, fail to reveal the long-term effect o IT investment on enterprise productivity. The panel data used by this dissertation collected from survey prevents error caused by discontinuity of the data. For such reason, the dissertation tests both short-term and long-term effect of IT investment on enterprise productivity.