This work addresses the measurement of the effect of information technology (IT) investments on a firm's productivity. Determining a quantifiable impact of a firm's IT has plagued senior executives, researchers and policy makers for several years, as evidenced by articles in trade magazines such as Fortune and Businessweek and in academic journals such as Management Science. Simple statistical techniques for measuring IT impact in a firm are fraught with methodological problems, as these techniques do not account for either the causal direction in managerial decision making or the...