IT Investment And Productivity Improvement

The information technology(IT) investment and productivity improvement have become a focus of research and practice. The automotive industry is the pillar industry of the national economy, and it uses IT widely. But there is few papers studying the IT investment in the automotive industry for empirical research. Therefore, this paper will explore the relationship of IT investment and productivity improvement on the domestic auto industry; what’s more, it will discuss the impact of IT investment on productivity under the conditions of different categories of IT investment and the different properties of enterprise.On the basis of literature review of the relationship between IT investment and productivity, this paper summarizes the shortcoming of the current study. Then this paper analyzes the mechanism of how IT investment impacts on productivity and explains the “black box” of IT investment and productivity, based on resource theory, complementary theory and knowledge theory. And it puts forward the hypothesis that IT investment has a significant positive impact on the productivity on the listed companies from auto sector. Considering the total factor productivity(TFP) representing the technological progress, TFP is a suitable index to reflect the relationship between IT investment and corresponding output, so this paper uses TFP to represent the production. Based on the data of 45 auto companies during period 2002-2013, this paper tests the following hypotheses for empirical research: IT investment has a significant positive impact on TFP on the listed companies from auto sector, the effect of IT-software investment is better than IT-hardware investment, the IT investment effect of vehicle enterprises is better than the parts enterprises, and the IT investment effect of state-owned enterprises is better than the private enterprisesThe result shows that the impact of IT investment on TFP is not significant in general, so is to IT-hardware investment. But the impact of IT-software investment on TFP is actively significant, as IT-software investment increase by 1%, TFP increase by 0.00479%. The impact of IT-software investment on TFP between vehicle production and parts production enterprise has no significant differences. The impact of IT-software investment on TFP for state-owned enterprises is significant positive, but for private enterprise it is not significant. So for the management, the domestic auto companies should focus on investment in the software, but not purchase hardware blindly, and the software is the “soft power” in IT investment.