ABSTRACT
This chapter addresses the measurement of the effect of information technology (IT) investments on a firm's productivity. Determining a quantifiable impact of a firm's IT has plagued senior executives, researchers, and policy-makers for several years, as evidenced by articles in trade magazines such as Fortune and Businessweek and in academic journals such as Management Science. The means are larger than the medians indicating fewer large hospitals and more small, rural hospitals which is a typical pattern in Western states. Total salaries from data processing and data communication are classified as IT labor. Salaries from the remaining accounts are classified as non-IT labor. Measurements become even more difficult because the models in the previous section require quantities and prices rather than the dollar amounts of input factors since heterogeneity of input mixes across observations makes it difficult to establish physical units of capital inputs.
