The Return on Information Technology: Who Benefits Most?

2021 | Information Systems Research | Citations: 0

Authors: Dhyne, Emmanuel; Konings, Jozef; Van den bosch, Jeroen; Vanormelingen, Stijn

Abstract: This paper uses a new microdata set of business-to-business firm-level transacti ... Expand

Abstract: This paper uses a new microdata set of business-to-business firm-level transactions in Belgium to construct a measure of information and communication technology (ICT) investment at the firm level, which we combine with the income statement of firms to analyze the impact of ICT on productivity. We find that a firm investing an additional euro in ICT increases value added by 1 euro and 35 cents on average. This marginal product of ICT investment increases with firm size and varies across sectors. Although we find substantial returns of ICT at the firm level, such returns are much lower at the aggregate level. This is due to underinvestment in ICT (ICT capital deepening is low) and misallocation of ICT investments. Collapse

Topics: IT investment productivity business-to-business accounting computer software

Methods: robustness check survey longitudinal research cross sectional research inventory method

How Does the Positioning of Information Technology Firms in Strategic Alliances Influence Returns to R&D Investments?

2021 | Journal of the Association for Information Systems | Citations: 0

Authors: Rahmati, Pouya; Tafti, Ali; Mithas, Sunil; Sachdev, Vishal

Abstract: Because software is fungible, has low marginal replication costs, and requires ... Expand

Abstract: Because software is fungible, has low marginal replication costs, and requires relatively high levels of initial investment to develop, understanding how IT-producing firms protect and leverage value from their research and development (R&D) investments is important. We examine how the positioning of IT-producing firms within their networks of strategic alliances moderates profits from R&D investments. We posit that alliances with IT-consuming firms generate relation-specific rents that, in turn, protect the value of R&D investments by making software innovations difficult for rivals to appropriate. Among IT-producing firms, we make a distinction between software consulting and services firms and software package-product firms. Our analyses of 464 IT-producing firms for the 14-year period 1996-2009 suggest that IT-producing firms' returns on R&D investments increase with alliance ties to IT-consuming firms. We also find that alliances with IT-consuming firms have a more beneficial effect on R&D investment returns for software consulting and services firms than for software package-product firms. Our findings yield nuanced insights into how IT-producing firms should position themselves within a network of alliances with IT-consuming firms. We discuss implications for research and practice. Arlington, and has taught IT strategy, analytics, visualization, artificial intelligence in business, digital marketing, digital fabrication, design thinking, fintech, system development, data modeling and SQL. He is also interested in new approaches to learning, including "learning by making" design thinking and experiential learning. Besides his interest in the Maker movement, he is researching the role of technology in enabling new approaches to teaching and learning. He is applying learning from this to structuring environments that enable students to learn in online/blended environments, with a focus on peerlearning that can scale. He has taught several thousand students in MOOCs on Coursera in digital marketing and 3D printing. Collapse

Topics: research and development digital innovation innovation management participatory design computer hardware

Methods: design methodology statistical hypothesis test Compustat regression analysis method robustness check

Theories: transaction cost economics

How Firms Make Information Technology Investment Decisions: Toward a Behavioral Agency Theory

2021 | Journal of Management Information Systems | Citations: 42

Authors: Dong, John Qi; Karhade, Prasanna P.; Rai, Arun; Xu, Sean Xin

Abstract: While prior research has established that information technology (IT) investment ... Expand

Abstract: While prior research has established that information technology (IT) investment has a significant impact on firm performance, relatively few studies have provided insights into the antecedents of IT investment decisions. By integrating the behavioral theory of the firm and agency theory, we propose a behavioral agency theory to explain performance shortfalls and corporate governance, which monitors and controls managers' tendency of overinvestment or underinvestment in IT, as key drivers that jointly determine IT investment. As such, IT investment facilitates a firm's problemistic search that generates innovation in response to performance gaps. We further examine the role of innovation outputs as a mediating mechanism linking IT investment to firm performance. Our econometric analysis of a large-scale panel dataset provides empirical evidence corroborating our theory. Overall, this study contributes a behavioral agency theory to deepen our understanding about performance drivers and outcomes of IT investment decisions. Collapse

Topics: IT investment innovation management corporate governance organizational productivity research and development

Methods: robustness check theory development descriptive statistic archival research Compustat

Theories: agency theory behavioral theory of the firm

Does Information Technology Improve Open Innovation Performance? An Examination of Manufacturers in Spain

2017 | Information Systems Research | Citations: 58

Authors: Gómez, Jaime; Salazar, Idana; Vargas, Pilar

Abstract: Our objective in this paper is to explore the impact of information technology ( ... Expand

Abstract: Our objective in this paper is to explore the impact of information technology (IT) on the performance of open innovation models. We study the effect of IT on the production of patents and product innovations. Our analysis of a large panel of Spanish manufacturing firms confirms that the effect of the proportion of external research and development (R&D) investments on the production of patents and new products has an inverted U-shape. The results also reveal that investments in IT positively moderate the consequences of open innovation on innovation performance by reducing identification, assimilation, and utilization costs. Our results provide evidence of the viability and benefit of a new strategic alternative to innovation that is different than the traditional process of vertically integrated R&D. The online appendix is available at https://doi-org.ezproxy2.utwente.nl/10.1287/isre.2017.0705. Collapse

Topics: innovation management open innovation IT investment research and development anonymity

Methods: survey inventory method descriptive statistic statistical hypothesis test robustness check

Firm Boundaries, Information Processing Capacity, and Performance in Manufacturing Firms

2016 | Journal of Management Information Systems | Citations: 3

Authors: Gómez, Jaime; Salazar, Idana; Vargas, Pilar

Abstract: We analyze the alignment between information processing needs and capacities. Fi ... Expand

Abstract: We analyze the alignment between information processing needs and capacities. First, we explore the relationship between firms’ vertical and horizontal boundaries and information technology (IT) capabilities. The literature postulates that less internalization leads firms to invest more in information technology. However, we argue that the use of taper integration and diversification increases the demand for IT-based resources such as IT infrastructure and IT human resources. Second, we propose that the fit between information processing needs and capacity has a positive effect on performance. Our hypotheses are tested on a panel of Spanish manufacturing firms, and the results provide general support for our arguments. One advantage of the data is that they include not only large firms but also small and medium-size manufacturers. From a theoretical perspective, the study contributes to the literature by providing novel insights on how decisions on the vertical dimension condition investments in IT capabilities. It also adds new evidence on the diversification–IT capabilities relationship and studies the consequences of alignment of corporate strategies and IT capabilities on firm performance. From a managerial perspective, our study suggests that changes in the vertical and horizontal limits should be followed by changes in IT capabilities to improve performance. Collapse

Topics: information technology capability outsourcing organizational productivity online learning system research and development

Methods: descriptive statistic survey longitudinal research generalized least square Student's t-test

Theories: resource based view of the firm

Valuing Information Technology Related Intangible Assets

2016 | Management Information Systems Quarterly | Citations: 12

Authors: Saunders, Adam; Brynjolfsson, Erik

Abstract: In this article, we assess the value of information technology related intangibl ... Expand

Abstract: In this article, we assess the value of information technology related intangible assets and then use data on business practices and management capabilities to understand how this value is distributed across firms. Using a panel of 127 firms over the period 2003–2006, we replicate and extend the finding from Brynjolfsson, Hitt, and Yang (2002) that $1 of computer hardware is correlated with more than $10 of market value. We account for the missing $9 by broadening the definition of IT to include capitalized software, and then include all purchased and internally developed software, other internal IT services, IT consulting, and IT-related training (whether or not it is capitalized by the firm). In addition, we use data on IT-related business practices in order to analyze the distribution of IT-related intangibles within the sample. Our results suggest that the invisible IT not accounted for on balance sheets is being priced into the market value of firms. We also estimate that there is a 45% to 76% premium in market value for the firms with the highest organizational IT capabilities (based on separate measures of human resource practices, management practices, internal IT use, external IT use, and Internet capabilities), as compared to those with the lowest organizational IT capabilities. Our results thus suggest that contributions of IT to value depend heavily on other factors, and are not a rising tide that lifts all boats. Collapse

Topics: computer hardware IT investment research and development advertising management information technology capability

Methods: survey Compustat longitudinal research autocorrelation analysis robustness check

Theories: economic theory

How to Increase the Inventory Efficiency in Information Security Risk and Compliance Management

2015 | European Conference On Information Systems | Citations: 0

Authors: Fenz, Stefan; Heurix, Johannes; Neubauer, Thomas

Abstract: The inventory process, i.e. the assessment of assets and implemented countermeas ... Expand

Abstract: The inventory process, i.e. the assessment of assets and implemented countermeasures, consumes a significant amount of time in the risk and compliance management process. Assets and countermeasures have to be identified and classified in terms of confidentiality, integrity and availability requirements. Depending on the organization’s size this process may include thousands of assets and countermeasures. This paper presents a novel inventory approach for assets and already implemented technical, physical, and organizational countermeasures (based on tools for network device mapping, software inventory, asset management, etc.). To efficiently assess implemented organizational countermeasures (policies, guidelines, etc.) we developed a keyword- and rule-based approach which automatically identifies existing policies in the ISO 27002 control context. The method and its implementation support middle and large organizations at efficiently assessing assets and implemented countermeasures by highly automating the inventory process. The method is not bound to any organization type or industry sector. Collapse

Topics: organizational control information security risk computer hardware security policy usability

Methods: literature study ontological modelling inventory method

Do Large Firms Become Smaller by Using Information Technology?

2013 | Information Systems Research | Citations: 16

Authors: Im, Kun Shin; Grover, Varun; Teng, James T. C.

Abstract: The relationship between information technology (IT) and a key organizational de ... Expand

Abstract: The relationship between information technology (IT) and a key organizational design variable, firm size, is an important area of study, particularly given the ongoing transition to an information-based economy. To better understand the more nuanced aspects of the relationship, we formulated a bidirectional and time-lagged model that incorporates different perspectives from organizational theories and transaction cost economics. Our two models—the bidirectional and one-year lagged model and the bidirectional and two-year lagged model—were tested using nine-year panel data on IT spending, IT stock, coordination costs, firm size, and relevant control variables for 277 manufacturing firms. We found a sequential interaction between IT and firm size in both of the two models: as a firm grows in size, its coordination activities increase; the firm then uses more IT to handle the increased activities of coordination; this increased use of IT, in turn, decreases coordination costs, and eventually, the size of the firm decreases. It was also found that the presence of coordination costs is necessary for the sequential interaction between IT and firm size, indicating coordination between and within firms is a major reason for firms to invest in IT and for IT effect to take place on firm size. This study has taken an initial step by attempting to empirically examine dual causality and longitudinal effects between IT and firm size, and to reconcile different theoretical perspectives on the relationship between them. We hope this work can act as a catalyst for developing a better understanding of the complex relationship between IT and organizations, with the ultimate goal of offering robust prescriptions for successful structural change. Collapse

Topics: IT investment information system use research and development organizational change outsourcing

Methods: longitudinal research autocorrelation analysis Compustat sensitivity analysis statistical hypothesis test

Theories: organizational theory microeconomic theory transaction cost economics structuration theory coordination theory

DEA analysis of FDI attractiveness for sustainable development: Evidence from Chinese provinces

2013 | Decision Support Systems | Citations: 0

Authors: Lei, Ming; Zhao, Xinna; Deng, Honghui; Tan, Keah-Choon

Abstract: The paper extends the Malmquist productivity index to establish a theoretical mo ... Expand

Abstract: The paper extends the Malmquist productivity index to establish a theoretical model to evaluate foreign direct investment (FDI) attractiveness. This model and its implementation mechanism consider cost efficiency and profit efficiency changes that represent the influence of price level on inputs and outputs respectively. Using data from China from 1997 to 2008, we assess the attractiveness of FDI in terms of human capital stock, material capital stock, energy consumption situation, and degrees of market openness. We use data envelopment analysis to find the bottleneck of FDI attractiveness and to identify the potential market of each province. This study contributes to the literature by providing sound investment advices to multinational corporations. It also offers policy advice and guidelines to developing nations for setting policies and programs to attract FDI. Specifically, our results provide useful inputs for policy makers to create a mechanism design to attract FDI in the host country. Collapse

Topics: productivity human resource management missing data systems development

Methods: inventory method longitudinal research cross sectional research trade-off analysis method data envelopment analysis

Performance evaluation of production of IT capital goods across OECD countries: A stochastic frontier approach to Malmquist index

2012 | Decision Support Systems | Citations: 6

Authors: Chou, Yen-Chun; Shao, Benjamin B. M.; Lin, Winston T.

Abstract: As integrated supply chains, ubiquitous computing, and mobile applications have ... Expand

Abstract: As integrated supply chains, ubiquitous computing, and mobile applications have become the backbone for conducting business nowadays, the economic significance of information technology (IT) is self-evident. In this paper, we study IT value from an unconventional perspective: the production of IT capital goods. Using the true fixed-effects model of translog stochastic production frontier, we evaluate the performance of IT industries for 19 Organization of Economic Cooperation and Development (OECD) countries over the period of 2000 to 2009. We examine the productivity growth of these IT industries based on the Malmquist index and further analyze these productivity patterns through technological change and efficiency change. Overall, these IT industries are found to enjoy greater productivity growth than other industries when compared with previous findings. Our results show that technological progress is the main driver of productivity growth for the IT industry, efficiency change has a negligible effect, and each country's IT industry exhibits a distinctive performance profile. Policy implications are drawn from our results and related issues are identified for future research. We also highlight the advance of research methodology used in the study that can account for measurement errors, random fluctuations, and unobserved heterogeneity commonly encountered in empirical information systems research. Collapse

Topics: productivity computer hardware technological change database system communication service infrastructure

Methods: longitudinal research descriptive statistic inventory method economic model cross sectional research

Theories: theory of economic growth