Impact of information technology on firm productivity has received significant attention in information systems literature. Although many studies were performed to investigate this effect, the results were not conclusive in supporting a systematic effect. This study investigates this phenomenon in both manufacturing and service industries by considering a sample of 85 manufacturing and 77 service firms. Our research methodology utilizes a combination of various data envelopment analysis models and non‐parametric statistical techniques in testing for the influence of information technology investment on firm productivity. We investigate this effect under conditions of both constant and non‐constant returns to scale assumptions. Our results provide some very interesting insights and recommendations.
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