The coefficients of ordinary capital, labor, and IT capital are
significant in both productivity regimes. The magnitude of
the coefficient of an input factor captures the percent change
in productivity when the level of the input factor increases by
1 percent. Here, a 1 percent marginal increase in IT capital
will raise productivity under the two regimes of outsourcing
and no outsourcing by 0.077 percent and 0.018 percent,
respectively (see columns (i) and (vii)). The results show that
firms that outsource experience substantially higher returns to
IT capital. Moreover, the marginal product of IT capital25 is
also higher in firms that outsource relative to those served by
internal IS departments.