The Distinct Effects of Information Technology and Communication Technology on Firm Organization

Guided by theories of “management by exception,” we study the impact of information and communication technology on worker and plant manager autonomy and span of control. The theory suggests that information technology is a decentralizing force, whereas communication technology is a centralizing for...

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Bibliographic Details
Published in:Management science 2014-12, Vol.60 (12), p.2859-2885
Main Authors: Bloom, Nicholas, Garicano, Luis, Sadun, Raffaella, Van Reenen, John
Format: Article
Language:English
Subjects:
Access to information
Acquisition costs
Autonomy
Blue collar workers
Business enterprises
Communication
communication technology
Communications technology
Corporate headquarters
Costs
Datasets
Decentralization
Decision making
delegation
Diplomatic & consular services
Employment
Empowerment
Enterprise resource planning
Hierarchies
Independence
Industrial plants
Information and communication technologies
Information technology
Intranets
Knowledge
Management science
Managers
Manufacturing
Middle management
Nurses
Organization
Production
Production management
Productivity
Studies
Technology
Technology application
the theory of the firm
U.S.A
Western Europe
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Summary:Guided by theories of “management by exception,” we study the impact of information and communication technology on worker and plant manager autonomy and span of control. The theory suggests that information technology is a decentralizing force, whereas communication technology is a centralizing force. Using a new data set of American and European manufacturing firms, we find indeed that better information technologies (enterprise resource planning (ERP) for plant managers and computer-assisted design/computer-assisted manufacturing for production workers) are associated with more autonomy and a wider span of control, whereas technologies that improve communication (like data intranets) decrease autonomy for workers and plant managers. Using instrumental variables (distance from ERP’s place of origin and heterogeneous telecommunication costs arising from regulation) strengthens our results. Data, as supplemental material, are available at http://dx.doi.org/10.1287/mnsc.2014.2013 . This paper was accepted by John List, behavioral economics .
ISSN:0025-1909
1526-5501
DOI:10.1287/mnsc.2014.2013