Operational values of information technology and green initiatives: the stochastic production frontier approach

Abstract

Previous studies regarding environmental issues in the field of Information Technology (IT) focused on the direct impact of IT on the environment and indicated a trade-off relationship between them. This study employs the resource-based view (RBV), theory of production, and stochastic production frontier (SPF) approach to empirically investigate the operational value creating power of IT and green initiatives at firm, industry, and sector level, providing evidence that the presence of IT and green initiatives can positively contribute to operational performance. Our findings suggest that the complementarity phenomenon exist between green initiatives and IT. Furthermore, this study shows detailed information on how IT and green initiatives contribute to operational performance in different ways, provides managers and decision makers a guideline for IT and green initiative investment decision-making, and develops a more realistic stochastic production frontier model for researchers to apply.