Abstract: For many years, business has invested significant resources in information technology, hardware, software, and manpower. The Productivity Paradox is the seeming lack of productivity gains despite the increased investment in IT (information technology). For many decades the existence of a Productivity Paradox has been the subject of research interest. Conflicting results have been obtained from a variety of data sets. Until this study however there has been no study that has specifically reviewed operating and capital information technology expenditures and their impact on positive firm outcomes. The objective of this study was to investigate information technology productivity with a new data set and measure both information technology capital and operating expenditures to determine whether increased expenditures had a significant impact on how a firm viewed their IT quality as measured by improved decision making, data integrity, and data consistency. Results of the study indicated that changes in levels of information technology expenditures as a percent of revenues did not have a consistent positive impact on firm level productivity in this large sample of firms. The Productivity Paradox does seem to continue and sheer increase of expenditures does not directly result in improved firm outcomes. The major contribution of the study is that it provides an analysis of the impact of information technology expenditures on perceived firm IT quality.
Keywords: capital expenditures, Information Technology, operating expenditures, productivity paradox
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Recommended Citation: Peslak, A. (2014). A Study of Information Technology Operating and Capital Expenditures and Their Effect on Positive Firm Outcomes. Journal of Information Systems Applied Research, 7(3) pp 4-13. http://jisar.org/2014-7/ ISSN: 1946-1836. (A preliminary version appears in The Proceedings of CONISAR 2013)