Impact of computerization on firm performance: a case of Shanghai manufacturing enterprises
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Impact of computerization on firm performance: a case of Shanghai manufacturing enterprises YC Ng* and MK Chang Hong Kong Baptist University, Kowloon, Hong Kong The impact of computer-related input on firm productivity is not well understood in the developing world, including China. The present study contributes to this area by analyzing data collected from a sample of Shanghai manufacturing enterprises. Adopting a Cobb–Douglas production function, we find a positive relationship between computer personnel and enterprise output. The efficiency of enterprises, however, was shown to be generally low according to data envelopment analysis. The level of computerization was shown to make a positive contribution to improving efficiency in non-state-owned enterprises in both heavy and light industries. This was also shown to be the case for state-owned enterprises in heavy industry. Journal of the Operational Research Society (2003) 54, 1029–1037. doi:10.1057/palgrave.jors.2601609 Keywords: data envelopment analysis; performance measurement; computerization in developing countries
Introduction Economic reforms launched in China since 1978 have stimulated dramatic changes in China’s industrial sector. Greater autonomy in decision-making, the adoption of the contract responsibility system and profit-sharing schemes have raised expectations that China’s state-owned enterprises (SOEs) will improve their performance in terms of efficiency and productivity. The rapid development of the non-stateowned industrial sector (non-SOEs) poses an enormous challenge to SOEs through the creation of a competitive product market. Studies show that the performance of SOEs in terms of total factor productivity or production efficiency is far from satisfactory, although the output growth of SOEs has been improving over time.1–3 Comparative studies by types of enterprise show the relative success of non-SOEs.4,5 The performance of SOEs relative to that of non-SOEs has been attributed to the differences in management systems and technological level.6–9 The emergence of the ‘new’ economy and the adoption of high technology in the workplace could further widen the performance gap between SOEs and non-SOEs, assuming that the latter are better equipped with more advanced technology, have a better trained and qualified workforce, and have easy access to investment capital. Thus, it is important to examine the performance of SOEs and non-SOEs with different levels of computerization. This analysis will provide insight into the value of computerization. Studies of the impact of computerization on firm productivity in the Western business context demonstrate *Correspondence: YC Ng, Department of Economics, Hong Kong Baptist University, Kowloon, Hong Kong. E-mail: [email protected]
positive returns to investment in computer and related equipment in terms of sales or revenue.10–12 Based on a Cobb–Douglas production function, excess returns to computer pe
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