Business Value Literature Research Articles

Corporate social responsibility and firm value: exploring the moderating effects of information technology-enabled knowledge capabilities

PurposeA substantial amount of research has examined the firm value impact of corporate social responsibility (CSR). Nevertheless, the findings have been inconsistent, prompting researchers to identify contingencies under which the impact varies. This study examines how information technology (IT)-enabled knowledge capabilities moderate the relationship between CSR and firm value.Design/methodology/approachWe conducted the ordinary least squares (OLS) regression analysis on a sample of S&P 500 companies spanning from 2010 to 2017. We employed additional methods to test the robustness of the results, including the generalized method of moments (GMM) estimator and the two-stage least squares (2SLS) method.FindingsThe results show that IT-enabled absorptive capability (IT-AC) and IT-enabled social integration capability (IT-SIC) positively moderate the CSR–value relationship. Further, their moderating effects vary in distinct ways when environmental dynamism changes, hinting at the distinct underlying rationales behind the moderating roles of IT-AC and IT-SIC.Research limitations/implicationsThis study improves the understanding of the business value of CSR and IT. It has limitations in generalizability due to the use of secondary data.Practical implicationsThis study provides practical guidelines to managers about how to strategically leverage IT resources for the creation of CSR value.Social implicationsEncouraging businesses to enhance their CSR efforts and uphold sustainability extends beyond our immediate benefit and impacts future generations as well. However, due to an imbalance between costs and returns, companies often refrain from being wholeheartedly devoted to CSR. Our insights on guiding companies to derive more value from CSR can inspire their greater investment in CSR. Meanwhile, companies can obtain additional returns from deployed IT.Originality/valueThis study extends the IT business value literature by revealing how IT generates firm value in the context of CSR. It also adds critical insights into the mixed findings in previous research regarding the CSR–firm value link. The study’s findings offer useful guidance on the strategic deployment and utilization of IT resources to facilitate the creation of CSR value.

Management Emotion and Firm’s Strategic IT Investment Propensity

ABSTRACT Different from prior IS business value literature that has largely taken rational decision-making for granted, this paper investigated the impacts of management emotion on firms’ propensity of strategic IT investment. Based on 191 annual reports of 32 companies from three industries in a 6-year period (i.e. 2010–2015 fiscal year), we applied sentiment analysis to retrieve emotion tunes embedded in each report and analyzed their relationship with both the volume and the composition of three types of strategic IT investment signals (automate, informate, and transform) embedded in the annual report of the subsequent year. Results show that positive management emotion promotes firm’s propensity of all types of strategic IT investments and increases weights of informate and/or transform IT among all strategic IT investments. With positive management emotion, firms also show propensity of investing in strategic IT different from the industry’s dominant IT strategic role.

LEVERAGING FIRM PERFORMANCE THROUGH INFORMATION TECHNOLOGY STRATEGIC ALIGNMENT AND KNOWLEDGE MANAGEMENT STRATEGY: AN EMPIRICAL STUDY OF IT-BUSINESS VALUE

A central question for researchers and practitioners is whether and how knowledge management strategy (KMS) and information technology (IT) strategy alignment can help attain a competitive advantage. To address this question, this study draws on information strategic alignment (ITSA), and empirically examines the relationship between a firm’s KMS and IT on competitive performance. The survey examined empirical data from 225 Brazilian companies using the partial least squares path modeling to test the hypotheses proposed herein. The findings demonstrated that KMS exert significant, positive effects on ITSA, benefits of IT use (BUTI), business process performance (BPP), and firm performance (FP). The results suggest that researchers and practitioners should look beyond the direct effects on FP, and identify how KMS and ITSA can be leveraged to enable and support BPP, and thereby contributed to knowledge management strategy and IT business value literature.

Does Information Technology Reputation Affect Bank Loan Terms?

ABSTRACT This study investigates whether Information Technology (IT) reputation, captured by the accumulation of consistent IT capability signals, influences bank loan contracting even though banks have access to inside information. We predict that IT reputation is associated with better loan terms because it lowers credit risk via its impact on default and information risks. Results based on 4,218 loan facility-years reveal, as predicted, that firms with a reputation for IT capability tend to have more favorable price and non-price terms for loan contracts and are less likely to have their credit rating downgraded or to report internal control weaknesses than firms with no IT reputation. The study contributes to the banking and IT business value literature by showing that banks incorporate borrowers' nonfinancial characteristics, such as IT reputation, into loan contracting terms. JEL Classifications: G21; G32; M41; O32. Data Availability: All data are available from sources identified in the study.

The Impact of Information Technology on New Product Development Performance

Many managers expect a substantial impact of digitization on new product development (NPD) as it is an information‐intensive business process. Therefore, a better understanding of how information technology (IT) might improve the NPD process is important for both theory and practice. Drawing on the IT business value literature, this study develops a comprehensive conceptual model to investigate empirically how IT and non‐IT organizational antecedents translate into NPD IT capabilities and competences and how these are related with NPD performance. Based on survey data from German NPD managers, this study offers several insights. First, it shows that the development of superior NPD IT capabilities and competences depends on the ability to acquire and deploy suitable IT (i.e., firm‐level IT capabilities) and on appropriate strategic, structural, and cultural conditions ensured by a strong top management focus on NPD IT (i.e., executive champion for NPD IT). This study hence contributes empirical evidence to the NPD and the IT business value literature by expanding research on complementary resources. Second, this study addresses limitations regarding the conceptualization of NPD IT capabilities and their relationship with further sources of competitive advantage arising from NPD IT tool usage by considering both the effectiveness and the frequency of usage as well as the relationship between both. Third, this research updates the measurement of NPD IT tool usage effectiveness (i.e., IT leveraging competence) to account for technological developments. Moreover, this study reveals that the effectiveness of NPD IT tool usage is positively associated with NPD performance. It also highlights that the dissemination of IT tools does not directly increase NPD performance, but that NPD IT tool use frequency is an important antecedent of IT leveraging competence. For managers, this paper offers empirical evidence that firm‐wide IT capabilities and a focus on NPD IT are important predictors of NPD performance.

The impact of big data analytics on firms’ high value business performance

Big Data Analytics (BDA) is an emerging phenomenon with the reported potential to transform how firms manage and enhance high value businesses performance. The purpose of our study is to investigate the impact of BDA on operations management in the manufacturing sector, which is an acknowledged infrequently researched context. Using an interpretive qualitative approach, this empirical study leverages a comparative case study of three manufacturing companies with varying levels of BDA usage (experimental, moderate and heavy). The information technology (IT) business value literature and a resource based view informed the development of our research propositions and the conceptual framework that illuminated the relationships between BDA capability and organizational readiness and design. Our findings indicate that BDA capability (in terms of data sourcing, access, integration, and delivery, analytical capabilities, and people’s expertise) along with organizational readiness and design factors (such as BDA strategy, top management support, financial resources, and employee engagement) facilitated better utilization of BDA in manufacturing decision making, and thus enhanced high value business performance. Our results also highlight important managerial implications related to the impact of BDA on empowerment of employees, and how BDA can be integrated into organizations to augment rather than replace management capabilities. Our research will be of benefit to academics and practitioners in further aiding our understanding of BDA utilization in transforming operations and production management. It adds to the body of limited empirically based knowledge by highlighting the real business value resulting from applying BDA in manufacturing firms and thus encouraging beneficial economic societal changes.

Effect of digital transformation on organisational performance of SMEs

Purpose – The purpose of this paper is to examine the effect of the pilot implementation of an industry-specific web portal as an IT resource on textile SMEs organisational performance. Using a resource-based perspective, portal delivery functionalities, considered as non-physical IT resources, are analysed using the dimensions of portal usefulness, portal interface, and service-oriented portal functions on SMEs users’ perceived outcomes of organisational performance. Design/methodology/approach – Qualitative and quantitative approaches are used to explore the research hypotheses. Data were collected using field interviews and survey from senior executives of small- and medium-sized enterprises (SMEs) in the Taiwanese textile industry. Findings – Results indicate that the service-oriented portal function dimension, consisting of portal maintenance service, B2B function, and cloud computing, significantly influences organisational performance. Unexpected findings, such as the negative impact of greater industry benchmark information on perceived SME performance, deserve further investigation. Research limitations/implications – The study extends the theory and knowledge on the resource-based view and its implications on e-business organisational performance of SMEs. The study also offers findings relevant to the design of portal sites for SME administrators and information service providers. Limitations of the research include a small size and the industry-specific data limiting the generalisability of the findings. Practical implications – Research results practically serve as informative indicators for policy makers, information service providers, and SMEs executives to evaluate feasible elements for web portal design in traditional industry. Findings from this study may help portal service providers in designing better web portal functionalities for SMEs. Originality/value – This study contributes to the IT business value literature by identifying the linkages between industry-specific portal delivery functionalities and perceived organisational performance through the examination of portal usefulness, portal interface, and service-oriented portal function for textile SMEs.

Guest editorial: information technology-enabled supply chain management

It is widely accepted that advances in information technology (IT) will generate new opportunities when suppliers, business partners and customers work together to co-create and co-produce value. However, results from prior studies show that the mere possession of IT is unlikely to generate business value. Rather, IT creates value when information – frequently produced by IT infrastructure – is used to support complementary organizational and human resources. Still, the hypothesis that greater investment in IT will generate business value requires caution. The focus of this special issue is to extend our understanding of how firms in a supply chain create and capture business value with IT. Also, a review is provided of the IT business value literature in the journal Production Planning & Control: The Management of Operations. This literature is grouped into three types of business value: transactional, strategic, and transformational. The review justifies the importance of this special issue by highlighting the dearth of research on the topic in this journal. Lastly, future research directions are provided and this introduction concludes with a guide to the papers in this special issue.

Green practices-IS alignment and environmental performance: The mediating effects of coordination

The problem of environmental sustainability has been growing in recent years with an interest from both researchers and practitioners. A major gap that exists is the absence of empirical studies that addressed business value of green IS (information systems). Thus, drawing on the resource-based view of the firm and IT (information technology) business value literature, this study aims to develop a comprehensive research model of green practice-IS alignment, the key cross-functional coordination of green practices with manufacturing and marketing functions, and firm performance. The study provides a better understanding of the relationship between green practice-manufacturing coordination and green practice-marketing coordination, and how both variables mediated the relationship between green practices-IS alignment and environmental performance. The data used in this study were collected from manufacturing firms. The results show that a firm's green practices-IS alignment had a positive effect on both green practices-manufacturing coordination and green practices-marketing coordination. In turn, both green practices-manufacturing coordination and green practices-marketing coordination are the significant predictors of environmental performance. Meanwhile, green practices-IS alignment had an indirect effect on environmental performance via both green practices-manufacturing coordination and green practices-marketing coordination. Moreover, the findings of this study show that environmental performance is an important predictor of economic performance.

Senior Executives, IT Reputation Building & Implications for Market Valuation

The objective of this study is to identify factors that help build an IT reputation, and to evaluate whether markets value a firm’s ability to develop and sustain its IT reputation. Building on IT strategic leadership and IT business value literature, we argue that a similarity in the background and hierarchical proximity between CEO and senior IT executive increases the likelihood that the firm will develop an IT reputation, and this similarity/proximity is more important for product differentiating companies. Building on signaling theory, we argue that IT reputation matters to investors because it reduces information asymmetry. Investors interpret a firm’s sustainable IT reputation as a signal of its superior past IT strategy and future IT investment prospects thus raising its market value. The predicted relationships are validated by results from over 1300 US firms that have appeared in the Information Week 500 lists in the period from 1997 to 2009.

Measuring Electronic Commerce Technology–Enabled Business Value: An Empirical Investigation

This research investigates whether firms using e-commerce technologies are successful in generating business value and, if so, which e-commerce drivers determine this success and how firms should use these drivers. There is no systematic empirical evidence in the IT productivity and business value literature regarding the payoffs a business receives from its e-business initiatives. The current research contributes to the literature in the e-commerce area by identifying a set of e-business value constructs, incorporating these constructs in a model in a manner not done before, and empirically validating the model using an Analysis of MOment Structures (AMOS)/ Structural Equation Modeling (SEM) analysis. The present research also contributes to the e-business value literature by providing insights into causal relationships among Rogers' innovation and diffusion theory (IDT) factors. This is the first time a research study has empirically established comprehensive causal relationships among these factors. The SEM analysis of the model indicates that the proposed model is able to explain e-commerce success utilizing the constructs identified and grounded using IT business value literature and Rogers' IDT. We conclude by summarizing its contributions to the IT literature, in general, and the e-business literature, in particular, and by providing insights for practice and suggestions for future research.

A four‐dimensional view of IT business value

AbstractResearch on IT business value has recognized that organizational factors play critical roles in affecting how IT impacts on firm performance. However, there is neither a coherent way of specifying organizational factors nor a consensus on the relationship between IT and organizational factors within the research domain. This paper reviews IT business value literature and classifies organizational factors identified in the literature into four categories, based on a four‐dimensional view of organizations. A main finding is that pairwise relationships between IT and one single organizational factor have often been the basis for understanding IT business value, while the notion of how IT business value is affected by the interaction between IT and key organizational factors simultaneously is yet to be fully understood and empirically examined. As a result, this paper proposes a holistic approach to understanding IT business value and presents a discussion about future IT business research. Copyright © 2010 John Wiley & Sons, Ltd.

The Productivity of Information Technology Investments: New Evidence from IT Labor Data

This paper uses newly collected panel data that allow for significant improvements in the measurement and modeling of information technology (IT) productivity to address some longstanding empirical limitations in the IT business value literature. First, we show that using generalized method of moments–based estimators to account for the endogeneity of IT spending produces coefficient estimates that are only about 10% lower than unadjusted estimates, suggesting that the effects of endogeneity on IT productivity estimates may be relatively small. Second, analysis of the expanded panel suggests that (a) IT returns are substantially lower in midsize firms than in Fortune 500 firms; (b) they materialize more slowly in large firms—in midsize firms, unlike in larger firms, the short-run contribution of IT to output is similar to the long-run output contribution; and (c) the measured marginal product of IT spending is higher from 2000 to 2006 than in any previous period, suggesting that firms, and especially large firms, have been continuing to develop new, valuable IT-enabled business process innovations. Furthermore, we show that the productivity of IT investments is higher in manufacturing sectors and that our productivity results are robust to controls for IT labor quality and outsourcing levels.

The Aftermath of Information Technology Outsourcing: An Empirical Study of Firm Performance Following Outsourcing Decisions

Increasingly, organizations are jumping onto the information technology (IT) outsourcing bandwagon in an effort to create value. However, evidence indicating the positive economic consequences of such initiatives has been limited. This study attempts to fill this void by synthesizing the process-oriented research in IT business value literature and the resource-based theory to develop an integrative research framework for assessing the value proposition of IT outsourcing. With a process-oriented lens, the framework suggests that the effects of IT outsourcing are best documented at the process level and hence, it is imperative that one takes into consideration the impact of IT outsourcing on performance at both the process level as well as the firm level. Grounded in the resource-based view, the framework also accounts for the complementary role of firms' core IT capability as a critical condition for the value creation of IT outsourcing. Consistent with the process-oriented prediction, the findings suggest that the positive effects of IT outsourcing appear mostly at the process level, but not at the firm level. Moreover, it is found that the level of business value created by IT outsourcing is contingent on firms' core IT capability. Firms with superior core IT capability are found to enjoy an advantage in leveraging their outsourcing initiatives to enhance firm value.