Abstract
I. RESEARCH OBJECTIVE Our research objective is the evaluation of productivity gains following IT implementation. In contrast to prior empirical research on IT productivity that has focused primarily on crosssectional analysis, our time-series research design compares productivity before and after IT investment and facilitates causality inferences. While we are precluded from disclosing the amount of the IT investment in 1998, our DEA estimation results indicate a payback period of less than a year for the 1998 IT investment; the regression estimation is even shorter. Managerial actions leading to value creation need not be the same as actions leading to sustainable competitive advantage. We present the following simple economic analysis of competitive strategy to illustrate that the implementation of the same new IT for all competing firms in an industry can increase the value of all firms (see Banker et al. [1998] for more complex models).
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