DAVENPORT LEGAL SERVICES

Davenport Legal Services

Davenport Legal Services

TASK 01

In recent years, Davenport Legal Servicess have been investing substantial amounts of money in information technology (IS). In 1991, for instance, American service sector companies spent over $100 billion on hardware--more than $12,000 per information worker (Roach 1991)--and almost 40% of United States capital spending was being used to acquire IS. In 1996, American banks alone spent almost $18 billion on IS, while American and European financial institutions together invested over $75 billion (The Economist 1996). Much of this investment was directed at modifying office work and improving productivity yet, many authors claim that the benefits of IS are disappointing at best, and that IS spending has failed to yield significant productivity gains--hence the productivity paradox. On the other hand, IS spending has also been linked to significant productivity improvements (Brynjolfsson and Hitt 1993, 1995; Osterman, 1986).

Measurement Issues of Davenport Legal Services

No issue in the area of productivity estimation is as controversial as the choice of measures. Retail output is defined in terms of the added value to the customer in the form of place, possession, and time utility. This lack of physical output has generated a great deal of debate (Bucklin, 1978a, 1978b; Mark, 1982; Achabal et al., 1984, 1985; Hughes and Serpkenci,1985; Goodman, 1985; Thurik, 1986). The result of this debate has been the general acceptance of euro value added as the best measure of retail output.

Researchers commonly recognize two inputs of the retail production process: capital and labour. Retail capital has been measured as the square footage of space, euro value of assets, or the rental price of the property. The most common measure of retail capital is floor space. Lusch and Ingene (1979) argue that while square feet is more predictive when sales is used as a measure of output, both measures are adequate when using value added. The amount of labour used by a retailer to create output has been measured as either the number of employees or the amount of money paid to employees. The total number of employees or full-time equivalent (FTE) employees is the most common measure of labour. The total wage bill of employees is used to measure the amount of labour by Lusch and Ingene (1979) and Lusch (1980).

As indicated above, researchers tend to rely on either physical or monetary measures of retail inputs. Physical measures (e.g., square footage and FTE) have the advantage of being well accepted in the literature. Also, they have been shown to be slightly better empirical measures under certain conditions (Lusch and Ingene, 1979). However, physical measures suffer from several disadvantages, including the lack of ability to quantify information technology, heterogeneity of units, and interpretation difficulties. Physical measures have the distinct disadvantage of not being able to quantify information technology as a single variable since physically disparate units of information technology cannot be aggregated. Also, physical measures treat each unit of a factor as homogeneous, when they are heterogeneous. For example, an hour of management time is treated ...