| Abstract: |
Empirical studies on information communication technologies (ICT) typically
aggregate the"information" and "communication" components together. We show
theoretically and empirically thatthese have very different effects on the
empowerment of employees, and by extension on wageinequality. If managerial
hierarchies are devices to acquire and transmit knowledge and
information,technologies that reduce information costs enable agents to
acquire more knowledge and 'empower'lower level agents. Conversely,
technologies reducing communication costs substitute agent'sknowledge for
directions from their managers, and lead to centralization. Using an original
dataset offirms in the US and seven European countries we study the impact of
ICT on worker autonomy, plantmanager autonomy and spans of control.
Consistently with the theory we find that better informationtechnologies
(Enterprise Resource Planning for plant managers and CAD/CAM for
productionworkers) are associated with more autonomy and a wider span of
control. By contrast, communicationtechnologies (like data networks) decrease
autonomy for both workers and plant managers. Ourfindings are robust to using
exogenous variation in cross-country telecommunication costs arisingfrom
differential regulatory regimes. |