Chapter 11: Enabling the Flexible Enterprise – RFID and Smart Devices
11. Enabling the ﬂexible enterprise – RFID and smart devices Robert Laubacher INTRODUCTION During the 1980s, in the aftermath of the personal computer revolution, businesses substantially increased their investments in information technology (IT). Economists and management researchers expected that these higher levels of investment would lead to increases in economy-wide productivity and ﬁrm-level performance. But early studies found that IT investment was not associated with signiﬁcant productivity gains. In the late 1980s, Nobel laureate Robert Solow characterized this puzzling development with a quip: ‘You can see the computer age everywhere but in the productivity statistics’ (Solow 1987). With the rise of the World Wide Web in the 1990s, business investment in IT continued to boom. Yet researchers continued to struggle in their eﬀorts to show a link between IT spending and performance. Starting in the mid-1990s, MIT researchers Eric Brynjolfsson and Lorin Hitt produced a series of papers that examined data on both IT spending and organizational practices from a very large number of ﬁrms. Because their sample was substantially larger than the ones examined by prior researchers, Brynjolfsson and Hitt were able to demonstrate that IT had a signiﬁcant impact on performance. But their work also showed that information technology alone, in the absence of changes in organizational practice, did not have much impact. It was only when ﬁrms combined these two factors in tandem that they enjoyed major increases in both proﬁtability and stock market valuation (Brynjolfsson and Hitt 2000). Labour productivity in the US,...
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