The impact of information and communication technology on skilled labor and organization types

Abstract

Information and Communication Technology (ICT) affects the global economy and the business world enormously. In particular, the impact of ICT on work organization has been in the spotlight since the widespread introduction of computerized systems two decades ago. However, the relationship between ICT and organizational factors has not been indentified clearly. This study aims to investigate possible complementary relationships between ICT diffusion and organizational factors such as: labor, firm organization, product differentiation and the demand for skilled labor. Utilizing detailed firm-level data in Korea, this research scrutinizes whether the relationship among the organizational factors in Korean firms is different from that of other technologically advanced countries. The results show that ICT demand is complementary to investment in human capital and product differentiation, but not to autonomous organizations. ICT is also found to contribute to productivity and profitability in addition to its effects on these relationships. The results do not show any synergic effect with other factors, however. Investment in ICT should be considered with other organizational factors with attention paid to synergistic effects. The implications could help practitioners as well as academicians in investing in ICT and in studying ICT investment respectively.