An exploratory study of the determinants of information technology hardware production: a country-level analysis^*

* Narcyz Roztocki is the accepting Associate Editor for this article.

ABSTRACT

This research examines empirically factors influencing IT hardware production by employing a country-level data set for 1985–2009. Our results show that IT hardware production is driven by various country-level factors, but the impacts of these factors differ for two types of IT hardware. Electronic data processing (EDP) production has shifted to low GDP countries where wage levels are low, and a large portion of EDP produced in these countries tend to be exported to high GDP countries where demand is high. While the gap has decreased, however, medical and industrial equipment (MIE) production is still largely done in advanced economies. These findings imply that losing the manufacturing base in the U.S. might not be an issue for certain types of products, such as EDP, but it could be a serious issue for MIE. Thus, policies must be industry specific; a ‘one-size-fits-all’ policy would not work for the global IT industry.

KEYWORDS:

• IT hardware production
• electronic data processing
• medical and industrial equipment
• economic development
• GDP
• IT demand
• openness of the economy
• country-level analysis

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes on contributors

Namchul Shin is Professor of Information Systems in the Seidenberg School of Computer Science and Information Systems, Pace University. He received his Ph.D. in Management (specialization in MIS) from the University of California at Irvine. His current research interests focus on the areas of innovation, IT production and value, organizational impacts of IT, and open data. His work has been published in journals such as Decision Support Systems, Electronic Commerce Research and Applications, European Journal of Information Systems, Industry and Innovation, International Journal of Information Management, Journal of Electronic Commerce Research, Nature, and Science, among other journals. He is associate editor of Journal of Electronic Commerce Research and a member of the editorial board of Business Process Management Journal. He has served the Office of the Provost as a faculty fellow from 2012 to 2014 and is currently a faculty fellow at the Wilson Center at Pace University.

Jason Dedrick is Professor in the School of Information Studies and Center of Excellence Fellow at Syracuse University. His research interests include adoption and impacts of smart grid, cybersecurity and privacy issues associated with distributed energy markets, global value chains in the electronics industry, and economic and organizational impacts of information technologies. His work has been supported by grants from the U.S. National Science Foundation and the Alfred P. Sloan Foundation. He holds a Ph.D. in Management from the University of California, Irvine.

Notes

* Narcyz Roztocki is the accepting Associate Editor for this article.

1 The database has been compiled and updated by the Center for Research on Information Technology and Organizations (CRITO) at the University of California, Irvine.

2 The data for wage levels (or labor costs) are very hard to get across countries and years; a proxy could be GDP per capita, which should be correlated with labor costs at the country level.

3 As mentioned earlier, an increase in IT hardware production in NIEs (e.g., China) was also driven by factors such as production cost, quality, logistics and subsidies.

4 The estimate of the indirect effect of GDP per capita on MIE production (.0024) is calculated by the multiplication of the two path coefficients (−.032 and −.075).

5 The changes in production levels of EDP and MIE for each country during the period of 1985–2012 are shown in in Appendix (Tables A2 and A3).