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- W2186378818 abstract "This study looks at whether IT reduces inventory, as a specialization of a more general question how IT increases productivity at the firm level. Theoretical literature is ambiguous; the empirical literature, while generally supporting the “distortion-reducing effect” of IT, raises several estimation issues. Based on a large dataset of 1052 firms over 7 years, we examine the IT-inventory relationship by using different measures of IT to account for omitted complementarity bias, adopting recently reported controls to account for omitted variable bias, and employing novel instrumental variables to address possible endogeneity. Surprisingly, our estimation overturns previous results: we find no evidence that IT has any observable effect on inventory. Further probing into the moderators and mediators reveals more subtle roles of how IT really affects inventory. The aggregate IT effect masks differentials across the supply chain. We find that the IT effect is negative among manufacturers, but positive among retailers. Moreover, once we include growth into the inventory regression, the signs on the IT variables reverse. There results run counter to the current consensus, but shed new light on the bigger question how IT increases firm productivity." @default.
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- W2186378818 date "2009-01-01" @default.
- W2186378818 modified "2023-09-27" @default.
- W2186378818 title "Does IT Really Reduce Inventory? Opening up the Black Box between IT and Inventory" @default.
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