Sequential IT Investment: Can the Risk of IT Implementation Failure Be Your Friend?

2023 | Information Systems Research | Citations: 0

Authors: Choudhary, Vidyanand; Xin, Mingdi; Zhang, Zhe

Abstract: An extensive literature studies the benefits for a firm to be the first to inves ... Expand

Abstract: An extensive literature studies the benefits for a firm to be the first to invest in innovative technologies such as information technologies (ITs). However, IT investment often faces the risk of implementation failure. How would such risk affect an early adopter’s incentive to invest? Do late adopters benefit from information about the early adopter’s investment? In this paper, we investigate these questions in a context in which two firms, a leader and a follower, invest in a cost-reducing IT sequentially. This paper differs from prior literature in two aspects: First, IT adoption is nonexclusive and available to all client firms. Second, IT implementation can fail. In this case, the follower may have information about the leader’s IT investment level or implementation outcome before making an investment decision. We use a Hotelling model of duopoly competition to examine how IT implementation failure risks and the follower’s knowledge about the leader’s IT investment may affect the firms’ incentive to sequentially invest in IT. Our results show that the risk of IT implementation failure impacts the firms’ investment incentives and profits through three distinct effects: the first mover advantage mitigation; competition mitigation; and uncertainty-driven, cost-based differentiation effects, and these three effects may drive the firms’ investment and profits in opposite directions. The follower’s knowledge about the leader’s IT investment level before making an IT investment decision gives the leader a first mover advantage and the follower a disadvantage. In contrast, the follower’s knowledge about the leader’s IT implementation outcome can benefit both the leader and the follower. Finally, we find that a spaced-out sequential IT investment schedule, in which the follower makes the investment decision after the leader’s IT investment level and implementation outcome are both known, leads to the highest industry-wide IT investment and social surplus. History: Kai-Lung Hui, Senior Editor; Sameer Hasija, Associate Editor. Supplemental Material: The online appendix is available at https://doi.org/10.1287/isre.2022.1115. Collapse

Topics: IT investment systems implementation IS economics IS implementation success economic surplus

Theories: prisoner's dilemma game theory

When Less Is More: How Statistical Discrimination Can Decrease Predictive Accuracy

2023 | Organization Science | Citations: 0

Authors: Csaszar, Felipe A.; Jue-Rajasingh, Diana; Jensen, Michael

Abstract: Discrimination is a pervasive aspect of modern society and human relations. Stat ... Expand

Abstract: Discrimination is a pervasive aspect of modern society and human relations. Statistical discrimination theory suggests that profit-maximizing employers should use all the information about job candidates, including information about group membership (e.g., race or gender), to make accurate predictions. In contrast, research on heuristics in psychology suggests that using less information can be better. Drawing on research on heuristics, we show that even small amounts of inconsistency can make predictions using group membership less accurate than predictions that do not use this information. That is, whereas statistical discrimination theory implies that better predictions can be achieved by using all available information about an individual (including group characteristics that may be correlated with but do not cause performance), our model shows that using all available information only improves predictive accuracy under a very specific set of conditions, thus suggesting that statistical discrimination often results in worse predictions. By understanding when statistical discrimination improves or worsens predictions, our work cautions decision makers and uncovers paths toward reducing the occurrence of situations in which statistical discrimination benefits predictive accuracy, thus reducing its pervasiveness in society. Supplemental Material: The online appendix is available at https://doi.org/10.1287/orsc.2022.1626. Collapse

Topics: productivity individual productivity decision making environmental uncertainty accounting

Methods: machine learning descriptive statistic theoretical contribution survey

Theories: organizational theory

Support Forums and Software Vendor’s Pricing Strategy

2021 | Information Systems Research | Citations: 0

Authors: Dey, Debabrata; Ghoshal, Abhijeet; Lahiri, Atanu

Abstract: This research develops a microeconomic model to study the impact of support foru ... Expand

Abstract: This research develops a microeconomic model to study the impact of support forums on the software industry. Motivated by the rapid growth of forums such as Stack Exchange, Quora, and Yahoo! Answers, we examine what impact they could have on a software vendor’s pricing strategy. Because these forums provide an alternative, free source for obtaining software support, one might suspect that the shadow competition from them would eat into the profit the vendor makes from selling support services. We find that, although such a conclusion could be right at the forum’s initial and formative stages, it may not hold later, especially if the forum generates enough momentum. This is because forums, besides playing a substitutive role, also have a complementary effect. At the initial stages, the substitutive role of the forum dominates. However, if and when the forum grows sufficiently, the complementary role eventually takes control. In the meantime, the vendor can try to mitigate the immediate losses and find temporary relief by adopting a strategy of bundling support services with the product. Collapse

Topics: price management IS economics network effect consumer surplus economic surplus

Methods: experiment economic model design methodology

Theories: theory of bounded rationality

Predictive maintenance: strategic use of IT in manufacturing organizations

2019 | Information Systems Frontiers | Citations: 2

Authors: March, Salvatore T.; Scudder, Gary D.

Abstract: A combination of big data and predictive analytics orchestrated through the Inte ... Expand

Abstract: A combination of big data and predictive analytics orchestrated through the Internet of Things (IoT) offers many opportunities for researchers in Information Systems, Operations Management and Strategy to look at old problems in new ways, and to identify completely new research areas. While there is much hype, little research has been conducted that informs companies about how to profitably integrate the IoT with strategic or operational processes. This paper views the IoT through the lens of predictive maintenance -- the use of real-time data and predictive analytics algorithms to dynamically manage preventive maintenance policies. These are being used by numerous manufacturing organizations to transition from product-oriented to service-oriented business models. In particular, we analyze optimal preventive maintenance policies in an environment where equipment is subject to a deterioration, which shifts it from its initial, fully-productive state, having a specified, age-dependent failure rate to a less-productive or deteriorated state, having a different, presumably higher, age-dependent failure rate. The deterioration, itself, is a random process. Collapse

Topics: internet of things mobile system predictive maintenance strategic management big data

Methods: machine learning descriptive statistic design science conceptual modelling computational algorithm

Theories: theory of affordance

The "Invisible Hand"of Piracy: An Economic Analysis of the Information-Goods Supply Chain

2018 | Management Information Systems Quarterly | Citations: 0

Authors: Kim, Antino; Lahiri, Atanu; Dey, Debabrata

Abstract: In this paper, we study the economic impact of piracy on the supply chain of inf ... Expand

Abstract: In this paper, we study the economic impact of piracy on the supply chain of information goods. When information goods are sold to consumers via a retailer, in certain situations, a moderate level of piracy seems to have a surprising positive impact on the profits of the manufacturer and the retailer while, at the same time, enhancing consumer welfare. Such a "win-win-win" situation is not only good for the supply chain, but is also beneficial for the overall economy. The economic rationale for this surprising result is rooted in how piracy interacts with double marginalization. We explain this rationale and develop useful insights for management and policy. Collapse

Topics: IS economics network effect supply chain management information good consumer surplus

Methods: theoretical contribution experiment

Theories: game theory

Selling or Leasing? Pricing Information Goods with Depreciation of Consumer Valuation

2017 | Information Systems Research | Citations: 5

Authors: Dou, Yifan; Hu, Yu Jeffrey; Wu, D. J.

Abstract: Should a monopolistic vendor adopt the selling model or the leasing model for in ... Expand

Abstract: Should a monopolistic vendor adopt the selling model or the leasing model for information goods or services? We study this question in the context of consumer valuation depreciation. Using a two-period game-theoretic model, we consider two types of consumer valuation depreciation for information goods or services: vintage depreciation and individual depreciation. Vintage depreciation assumes that a good or service loses some of its appeal to consumers as it becomes dated, and this effect persists independent of usage. Individual depreciation instead assumes that valuation depreciation happens only for consumers who have consumed or experienced the good or service. We identify conditions under which each pricing model is preferred. For vintage depreciation information goods, the leasing model dominates the selling model in vendor profit. For individual depreciation information goods, the selling model dominates the leasing model as long as the magnitude of individual depreciation exceeds a certain threshold; otherwise, leasing dominates selling. We consider several model extensions such as when network effects are present. Furthermore, we show a negative interaction effect between vintage depreciation and network effects in vendor profit. By contrast, the interaction effect between individual depreciation and network effects can be either negative or positive, depending on the magnitude of individual depreciation. Managerial implications are also discussed. Collapse

Topics: information good network effect price management IS economics economic surplus

Methods: mathematical model optimization model

Theories: game theory

Effects of Competition Among Internet Service Providers and Content Providers on the Net Neutrality Debate

2017 | Management Information Systems Quarterly | Citations: 0

Authors: Hong, Guo; Bandyopadhyay, Subhajyoti; Lim, Arthur; Yang, Yu-Chen; Cheng, Hsing Kenneth

Abstract: Supporters of net neutrality have often argued that more competition among Inter ... Expand

Abstract: Supporters of net neutrality have often argued that more competition among Internet service providers (ISPs) is beneficial for an open Internet and that the market power of the ISPs lies at the heart of the net neutrality debate. However, the joint effects of the competition among ISPs and among content providers (CPs) have yet to be examined. We study the critical linkage between ISP competition and CP competition, as well as its policy implications. We find that even under competitive pressure from a rival ISP, an ISP always has the incentive and the ability to enforce charging CPs for priority delivery of content. Upending the commonly held belief that when facing direct competition CPs will always support the preservation of net neutrality, we find that, under certain conditions, it is economically beneficial for the dominant CP to reverse its stance on net neutrality. Collapse

Topics: net neutrality internet technology economic surplus IS economics price management

Methods: simulation game theoretical model

Theories: prisoner's dilemma

Parameter Tolerance in Capacity Planning Models

2017 | HICSS | Citations: 0

Authors: Leung, Ying Tat; Kamath, Manjunath; Ma, Juan

Abstract: In capacity planning for a service operation, analytical models based on queuein ... Expand

Abstract: In capacity planning for a service operation, analytical models based on queueing theory allow the user to quickly estimate the capacity required and to easily experiment with different system designs or configurations, for a given set of input parameters. An input parameter of the model could be inaccurate or may not be known beyond a good guess. In order to determine if the analysis results (and hence the system design) are robust to parameter estimation errors, sensitivity analysis can be performed. We study an alternative approach that involves specifying a tolerance range of a system performance measure and calculating a feasible region of the uncertain parameters for which the performance measure will be within the tolerance range. We illustrate this approach using basic exponential queueing models as well as a model of an order fulfillment operation in a distribution center. Collapse

Topics: workstation information system use decision making systems design packaged software

Methods: sensitivity analysis mathematical model

Coalition Formation Procedures: The Impact of Issue Saliences and Consensus Estimation

2016 | Group Decision and Negotiation | Citations: 0

Authors: Blockmans, Tom; Guerry, Marie-Anne

Abstract: Coalition formation procedures incorporate two properties that are not often fou ... Expand

Abstract: Coalition formation procedures incorporate two properties that are not often found in other coalition formation models: the choice between different formation paths and constrained consensus positions. However, there are two aspects of coalition formation procedures that are often overlooked: issue saliences and consensus estimation. Issue saliences are a measure of the importance that parties can attribute to issue dimensions. Initially, we employ the classical application to implement issue saliences. The classical application combines the Euclidean distance with the center of gravity as a consensus estimate. Secondly, we introduce a consistent distance application where the coalition consensus position is determined by minimizing the sum of salience-weighted Euclidean distances. The impact of these aspects is examined with the help of both numerical and empirical applications. The results indicate that both the consensus estimation method and the inclusion of issue saliences do not only have an impact on the estimated consensus position. They also determine the individual parties’ preferences towards the potential coalition formation procedures. Collapse

Methods: case study survey computational algorithm data modeling

From College to Consulting Through the Main Door: when IT Skills Make a Difference for Junior Enterprise Students

2016 | International Conference on Information Systems | Citations: 0

Authors: Pennarola, Ferdinando; Pistilli, Luca; Dawson, Gregory

Abstract: For many European college students, Junior Enterprise (JE) is a popular part of ... Expand

Abstract: For many European college students, Junior Enterprise (JE) is a popular part of the educational process that is designed to give them real life exposure to companies. Many students aspire entering the consulting field, and the JE experience becomes a way to signal their fit to potential employers. However, our analysis conducted on 768 different LinkedIn professional profiles shows stark differences between students who lack technical skills and those with strong technical skills. In particular, while higher IT skills are, on average, positively correlated with the individual probability of becoming a consultant, this positive effect is significantly moderated by gender, undergraduate major and role played within JE. Using signaling theory to explain our results, we find evidence that signals are not universal and, for some groups, high IT skills are more important than to other ones. Collapse

Topics: IT skill LinkedIn IT career marketing management programming language

Methods: qualitative interview experimental group

Theories: signaling theory