Analysing the Information Technology Paradox in the Supply Chain

Purpose: This paper studies the impact of ICT on the productivity of the activities of the firm in the supply chain focusing on the actual use of these technologies instead of on the mere ICT investment. Approach: Approaching the research goal with the theoretical framework of the Theory of the Diffusion of Technology and applying Data Envelopment Analysis Techniques to a large sample of more than 2.000 Spanish firms representing the whole Spanish economy. Findings: The results show that the biggest increase in efficiency is related to high levels of computerization of the internal logistic operations of the firms, while medium and low levels of computerization of the internal logistic operations have almost no effect on the performance of the firms. The computerization of the external logistic operations with suppliers and customers has a positive impact on the performance of the firm, independently of the level of computerization achieved. Finally the results imply that the performance improvement due to the computerization of external logistic operations is always lower than the improvements due to the intensive of ITC in internal logistic operations. Managerial Implications: Firms do not always obtain the expected ROI when they invest in IT in the supply chain. Our research confirms this to be especially true when attempting to use IT to coordinate internal activities. In this case the ROI will be high only if the firm heavily uses IT in coordination. External coordination is easier to implement as it does not need an IT intensive organization to yield positive results to the IT investment. However our research should not discourage firms from using IT for internal coordination as in the end it will yield much better performance than only using IT to coordinate inbound and outbound logistics