Beyond the Productivity Paradox Essay

553 WordsJul 20, 20083 Pages
The question of whether computers do or do not demonstrably improve productivity has stirred up a debate that has been on the agenda of academics, the press, and consultants since the early 1970s. The authors of this paper were also taking part of that debate. Their main intention was to point out that the existing methods of measuring productivity do not help to measure the productivity that IT adds to the business and to point out the tangible and intangible benefits of the productivity. This paper has used several sources to illustrate how the productivity should be measured. According to authors existing productivity measurements mainly depends on the Input and output. This gives us the picture that measuring the productivity based on the above input output theory has only considered the tangibles. The contribution which IT gives to the productivity cannot be measured from these methods and the authors have taken the example of bank ATMs to prove their argument. When ATMs are added to the bank number of transactions goes down which a branch had before they introduce it. That shows a decrease in output. But it does not illustrate the convenience which customer gains. By this argument they have successfully illustrated that there are not only those tangibles but also the intangibles. The next argument that authors have pointed out is that how firms adopt IT and how they manage IT will effect on the ROI. The example of two firms have spent same amount on IT and one firm gains a tremendous output and other firm gains only a small output. To explain this point more clearly they have used a graph (figure 2) which shows the productivity with IT stocks. Authors were pointing out how a company should adopt IT in order to gain successful productivity increase. To this point they have successfully addressed by telling that the company structure should also be changed

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