Using a novel comprehensive data set of IT investment at the firm level, we find that a firm investing an additional euro in IT increases value added by 1 euro and 38 cents on average. This marginal product of IT investment increases with firm size and varies across sectors. IT explains about...

The debate about the drivers of firm performance is central to the fields of strategic management and industrial organization. Much of this debate has focused on determining the relative importance of firm versus industry effects. In contrast, the measurement of the relative importance of...