Market Value Impacts of Information Technology Enabled Supply Chain Management Initiatives

Abstract

This study investigates the market value impacts of IT-enabled supply chain systems using event study method. The authors examine abnormal stock returns to investments in IT-enabled SCM systems announced by 346 firms from 2001 to 2004, and find significant, positive abnormal returns for two, three, and five day periods surrounding the event date. Further, the authors employ organizational integration perspective to test if market value impacts differ based on the functional scope, physical scope and the industry context of the SCM systems adopted by the firms. Using a multiple regression analysis, the authors find the abnormal returns to be greater for firms investing in SCM systems with greater functional scope and physical scope. The authors find marginal evidence for the effect of industry context and no impact of firm size on the market value generated from investments in SCM systems.