Saturday, November 25, 2006

The way you do I.T.

Does the degree of success enjoyed by US firms operating in the UK imply that productivity growth may have more to do with superior management/organization rather than simply geographical or regulatory environment? H/t to D.R. for sending this along.

Excerpt from, It ain’t what you do it’s the way you do I.T. (2005), by Nick Bloom, Raffaella Sadun and John Van Reenen; London School of Economics:

Productivity growth in sectors that intensively use information and communication technologies (ICT) appears to have accelerated faster in the US than in Europe since 1995. If this was partly due to the superior management/organization of US firms (rather than simply the US geographical or regulatory environment) we would expect to see a stronger association of productivity with IT for US multinationals located Europe than for other firms. We examine a large panel of UK establishments from all business sectors and provide evidence that US owned establishments have a significantly higher productivity of IT capital than either non-US multinationals or domestically owned establishments. Indeed, the differential impact of IT appears to fully account for almost all the difference in total factor productivity between US-owned and all other establishments. Further, this finding is particularly strong in the sectors that intensively use information technologies: the very same ones that account for the US-European productivity growth differential since the mid 1990s.


How comparable is Canada to the UK when it comes to the productivity levels of IT? A recent article from The Financial Times sheds some light on this. The article suggests that the bursting of the dot com bubble may worsen things for both countries.

'Perfect storm' could stifle IT (Nov.22)

In the UK, a report by Lancaster University School of Management and the British Computer Society revealed that applications for computer science degree courses have dropped by half in the past five years. Software engineering applications have fallen by 60 per cent.

In Canada, things are not much better, according to the council organised by the government to monitor and promote the development of IT skills. Canada will need 89,000 new IT professionals in the next three to five years, warns the Information and Communications Technology Council, "yet enrolments in IT courses have dropped by 50-70 per cent because of the negative view of the IT sector," explains Paul Swinwood, president of the ICTC.
In Canada, the ICTC is also co-opting private sector organisations and community colleges as close to the client base as possible. "We're bringing together the engineers, the technicians and the technologists; my council, the Canadian Information Processing Society, and your local IT associations," says the ICTC's Mr Swinwood. "We can have a national programme but we need feet on the ground, in the community." Creating a link between high-level policy and direct action is crucial if IT education is to be effective in schools. The difficulties the sector faces in terms of generating appropriate skills are inseparable from its own success.

For many teachers who advise young people, it moves too quickly and unpredictably for comfort. This is why the BCS's Mr Rodd has been horrified to see some teachers advising students against careers in IT, citing the uncertainty caused by the bursting of the dotcom bubble.

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