TELECOMMUNICATION INVESTMENT EFFECTS ON LABOUR PRODUCTIVITY

Chunhui Liu
Grace O’Farrell
University of Winnipeg
ABSTRACT
Telecommunication development has experienced significant growth since the 1990s. Despite the high perceived value of information technology (IT), empirical studies have generally reported mixed results when examining the relationship between information technology spending and productivity. Based on contingency theory, we hypothesize that firm characteristics affect how investment in telecommunication impacts labour productivity. This study extends recent advances in IT value literature by studying what types of firms are in a better position to benefit from telecommunication investment. In particular, this study examines whether and how telecommunication spending impacts labour and administrative productivity differently in firms with different size and industry type.

The empirical evidence reveals that the value of telecommunication spending is contingent upon firm characteristics such as industry type. Empirical results not only reveal a significantly positive relationship between telecommunication spending and labour or administrative productivity, but also uncover that durable-goods industry firms and larger firms can realize higher business value from telecommunication investment in improved employee productivity.