If companies can become more productive by increasing their physical capital, why would a company not buy up-to-date computers for all employees each year?

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15-01-2019
Business

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If companies can become more productive by increasing their physical capital, why would a company not buy up-to-date computers for all employees each year?

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andriansp andriansp · Answer 1 · 2019-01-26T21:39:16+01:00

Giving up to date computers for employees indeed would most likely increase the productivity among the employees due to the additional speed and features.

But, the income that the companies get from the additional speed and features DOES NOT always surpass the capital they need to spend to purchase the computers.

Companies need to ensure that the monetary value of additional productivity made by increasing the capital should surpass the cost that they need to make to increase the physical capital.