IT Business Value Research Articles

Investigating the Effect of the Mediating Role of Process Re-engineering and Total Quality Management on the Business Value of Information Technology

The widespread use of information technology in the business sector has led to the development of e-businesses. The primary goal of this study is to examine the impact of mediation process reengineering and total quality management on the business value of information technology. We assessed the validity and reliability of the survey instrument, a questionnaire, using Cronbach's alpha coefficient. The study analysed 102 managers and experts in the field of computer services. The study employed path analysis to scrutinise the data. The results revealed a significant relationship between Total Quality Management (TQM) and process reengineering, which is considered a valuable technology. We also detected a significant correlation between total quality management and process reengineering.

Exploring IT business value creation in a Taobao Village EC ecosystem: A systems theory perspective

By extending and elaborating on Nevo and Wade's systems theory perspective, we propose a model to validate the causal relationships among platform compatibility, integration effort, realized synergy, and IT business value (decomposed into social and economic value) within the context of a Taobao village E-commerce (EC) ecosystem. We collected data from Taobao village EC ecosystems to validate the proposed hypotheses. Using 258 valid responses, we reveal the following: (1) Platform compatibility, a second-order latent construct, includes IT-commerce alignment and resource-sharing routine alignment. Platform compatibility positively affects realized synergy. (2) Integration effort positively affects platform compatibility and realized synergy. (3) Realized synergy positively impacts social and economic value. (4) Realized synergy mediates the relationship between critical enablers (integration effort and platform compatibility) and social and economic value. Specifically, the relationship between platform compatibility and social and economic value is partially mediated, while the relationship between integration effort and value is fully mediated. These findings extend systems theory by offering deeper insights into the integration of systems theory and RBV, particularly highlighting the mediating role of synergy. They reveal that compatibility and integration effort directly contribute to value creation, and that synergy further amplifies these effects.

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.

Business value of IT for small and medium enterprises during COVID-19: a systematic literature review

The article addresses the impact of the COVID-19 pandemic on Small and Medium Enterprises (SMEs), focusing on the Information Technology (IT) investments made by these companies between 2020 and 2023. The health crisis generated significant economic effects, particularly in emerging economies, exacerbating pre-existing economic fragility and inequality. The study seeks to identify, through a systematic review of the literature, the investments, contributions, and uses of IT by SMEs located in Latin American, Asian, and European countries during the aforementioned period. It is concluded that, during COVID-19, IT investments in SMEs were not only a response to crises, but also a strategic source of resilience and financial stability. IT investment was highlighted as essential for innovation, digital transformation, and business continuity. Although low employee digital skills persist, the trend towards IT investment is positive, allowing SMEs to take advantage of technological and governmental opportunities to face the challenging economic context.

Creating AI business value through BPM capabilities

PurposeAlthough businesses continue to take up artificial intelligence (AI), concerns remain that companies are not realising the full value of their investments. The study aims to provide insights into how AI creates business value by investigating the mediating role of Business Process Management (BPM) capabilities.Design/methodology/approachThe integrative model of IT Business Value was contextualised, and structural equation modelling was applied to validate the proposed serial multiple mediation model using a sample of 448 organisations based in the EU.FindingsThe results validate the proposed serial multiple mediation model according to which AI adoption increases organisational performance through decision-making and business process performance. Process automation, organisational learning and process innovation are significant complementary partial mediators, thereby shedding light on how AI creates business value.Research limitations/implicationsIn pursuing a complex nomological framework, multiple perspectives on realising business value from AI investments were incorporated. Several moderators presenting complementary organisational resources (e.g. culture, digital maturity, BPM maturity) could be included to identify behaviour in more complex relationships. The ethical and moral issues surrounding AI and its use could also be examined.Practical implicationsThe provided insights can help guide organisations towards the most promising AI activities of process automation with AI-enabled decision-making, organisational learning and process innovation to yield business value.Originality/valueWhile previous research assumed a moderated relationship, this study extends the growing literature on AI business value by empirically investigating a comprehensive nomological network that links AI adoption to organisational performance in a BPM setting.

The Influence of a New Model of IT Leadership on Organizational Change Management and IT-Business Value Delivery in the First Phase of Digital Transformation Amid COVID-19

This study examines and analyzes the influence of a new model of IT leadership on organizational change management and IT-business value in large manufacturing companies. This study used a quantitative research method; data were collected using a questionnaire using SmartPLS 4. This study involved 47 large manufacturing companies as unit analysis with multistage sampling in sample selection, first by purposive sampling and second by the Slovin formula. The results of this study stated that IT leadership affects organizational change management significantly but has no effect on IT-business value. Organizational change management affects IT-business value significantly. The lack of experience and knowledge in IT leadership has an impact on failure in delivering IT-business value. The results of this study provide valuable insight for IT executives in developing their IT leadership, business executives for their engagement in IT-business value delivery, and manufacturing companies to cope with their struggles in managing change in the ERP implementation, especially in the first phase of their digital transformation to achieve IT-business value successfully.
 Keywords: IT leadership, organizational change management, IT-business value

Dual Pathways of Value Creation from Digital Strategic Posture: Contingent Effects of Competitive Actions and Environmental Uncertainty

Dual Pathways of Value Creation from Digital Strategic Posture: Contingent Effects of Competitive Actions and Environmental Uncertainty IN STOCK SKU 48.1.15 Publication History Received: October 9, 2019 Revised: December 20, 2020; February 23, 2022; November 7, 2022; June 7, 2023 Accepted: August 3, 2023 Published Online in Issue: March 1, 2024 https://doi.org/ Downloadable File Article PDF $15.00 Add to Cart Abstract Digital strategic posture (DSP) is defined as a firm’s overall strategic stance toward investing in information technology (IT) initiatives relative to that of rival firms. This study examines how a firm’s DSP affects firm performance. Drawing on the competitive dynamics perspective and contingency view, we demonstrate that DSP influences competitive actions through dual pathways. First, DSP enables firms to take competitive actions that are more appropriate given the level of environmental uncertainty (captured by industry dynamism). In particular, our findings suggest that a proactive DSP enables relatively more innovation-oriented actions in dynamic industries while enabling relatively more operations-oriented actions in less dynamic industries. Second, DSP plays a facilitating role in firms’ execution of competitive actions such that a firm’s value from its proactive DSP is enhanced when there is a fit between the type of the firm’s competitive actions and its level of environmental uncertainty. Specifically, we find that firms with a more proactive DSP achieve superior firm performance from innovation-oriented actions in dynamic industries and from operations-oriented actions in less dynamic industries. Taken together, our findings suggest that a proactive DSP not only allows firms to take appropriate competitive actions that fit their environmental conditions but also contributes to firms’ performance by facilitating the execution of these appropriate actions, thus enhancing their efficacy. Additional Details Author , , , and Year 2024 Volume 48 Issue 1 Keywords Digital strategic posture, competitive actions, innovation-oriented actions, operations-oriented actions, competitive dynamics, contingency view, business value of IT, IT strategy, industry dynamism Page Numbers 409-426

Financial Analysis of Information Technology Investments: “Assessing Benefits through Cost-Benefit Analysis and Ranti's Generic IS/IT Business Value Approach"

Technology drives economic growth and increases industrial competitiveness and has long been recognized for its dominance of industrial productivity. PT XYZ is a company engaged in the transportation services sector in Indonesia; from 2012 to 2017, PT XYZ carried out a massive digital transformation process by investing in information technology to improve its quality. This investment includes ERP, SAP implementation and improvement, RTS implementation and improvement, web-based information technology platforms, and mobile applications. This study aims to analyze the benefits of information technology investment made in PT XYZ using secondary data from the Company's annual financial statements accessed through the Company's website. The results of this study were conducted by analyzing financial statements from 2012 to 2020 using the Cost Benefit Analysis method and Ranti's Generic IS / IT Business Value method. Based on the Analysis, investment in information technology benefits the Company without distinguishing between tangible and intangible benefits identified in the form of 8 sub-categories in 5 categories based on Ranti's Generic IS/IT Business Value.

Unveiling the Determinants of IT Business Value: An Industry-Level Analysis on the Role of the Information-Based Nature of the Product

Unveiling the Determinants of IT Business Value: An Industry-Level Analysis on the Role of the Information-Based Nature of the Product

Big Data and Business Analytics Enabled Innovation and Dynamic Capabilities in Organizations: Developing and Validating Scale

In recent years, innovation and competitive advantages have been built through information systems (IS); in particular, big data and business analytics (BDA) capabilities are being highlighted as essential enablers in creating innovation. This research focused on developing a big data scale using the Dynamic Capabilities View (DCV). DCV is based on an organization's ability to sense, seize, and transform capabilities to transform organizations and leverage innovations to remain competitive in the changing business environment. This study is based on convergent and discriminant validity using PLS-SEM with a sample of 191 firms. The proposed model includes twelve traits connected to sensing, seizing, and transforming attributes. The research outcome validates the scale and demonstrates that BDA enables dynamic capabilities and can achieve innovation in organizations when coupled with strategic management practices and IT resources that can be used to measure IT-business value.

The Effects of Information Technology in Retailer Performance and Survival: The Case of Store-Based Retailers

This research aims to empirically examine the effects of Information Technology (IT) in the performance and survival of store-based retailers. In particular, we investigate how two types of IT resources—Overall IT investment and Human IT resources—respectively influence retailer performance and survival. We draw on the resource-based view, dynamic capabilities, and IT business value research to develop the hypotheses. Our study employs a longitudinal panel dataset at the firm level obtained from secondary sources from 2010 to 2021. Our sample includes 95 store-based public retailers in the U.S. and has 654 firm-year observations in total. We employ the dynamic panel model and binary logistic regression method to investigate the effects of IT resources on retailer performance and survival, respectively. Our empirical results indicate that while overall IT investment has a positive effect on a retailer’s survival, human IT resources positively influence performance. In addition, stronger performance leads to greater survival likelihood. The findings provide important theoretical, managerial and policy implications concerning the business value of IT in the retailing context.

IT impact on open innovation performance: Insights from a large-scale empirical investigation

Motivated by prior inconclusive findings on the effectiveness of open innovation initiatives in generating business value and the complexity of open innovation, this study draws on the IT-enabled organizational capabilities perspective to propose that the mobilization of information technology (IT) resources can positively affect the development of open innovation initiatives and, in turn, improve firms' open innovation performance. Our empirical analysis of >1100 large Spanish firms confirms that firms' IT resource investments positively impact the development and execution of open innovation initiatives, which in turn improves firms' open innovation performance in terms of product and process innovations. This research contributes to the business value of IT and to Information Systems (IS) research on open innovation by evidencing the enabling role of IT investment in achieving open innovation performance gains.

Estimating the Value of Information Technology in the Productivity of the Transport Sector

This paper expands a methodology, originally formulated for calculating the firm-level business value of Information Technology (IT), to that for a whole sector and applies it experimentally for the transport sector using statistical databases for several countries in Europe. The term “business value” means the quantified impact of a given technology, in this case, Information Technology, on the productivity of a sector or firm as measured by a given “yardstick” (e.g., sales, revenue, and many others). This is important to know in order to justify investments in a given technology or technological sector and for policy formulation or regulation. This paper proposes a novel methodology for calculating the business value of IT in a given sector. This is the first time that such a task is attempted because in the past most research was focused on calculating the business value at firm-level. The suggested methodology is then applied by use of panel data from the statistical records of national statistics for the transport sector. The results show that infrastructural investment in Information Technology has an impact on the transport sector’s output, in terms of its annual production value, of the order of 5–6%. Through sensitivity tests and a discussion of the results, it is estimated that the actual impact may probably be a bit higher but not much higher (in any case, something below the 10% figure). The application also shows that the suggested methodology can be applied for the estimation of the impact of any other technology or service on any given economic sector. Finally, a possible future conceptual model is presented for the expansion of the methodology to a more global and integrated level considering the interaction from other sectors as well as other technological and environmental factors.

How finance shared services affect profitability: an IT business value perspective.

Shared services have become an important IT-enabled organizational form for providing support business functions to internal users. The information systems that implement and deliver shared services are part of the organizational IT infrastructure that has a twofold effect on firm financial performance. On the one hand, with the shared services model, the IT infrastructure consolidates so that the costs are lowered for providing the common functions firm-wide. On the other hand, the systems delivering the shared services embody the workflow and business functions so that the value of shared services can be gained from improvements in the function performance at the process level. We perceive finance shared services as IT-enabled services for corporate finance and accounting functions, and propose that finance shared services improve firm profitability via cost savings at firm level and via increased working capital efficiency at the process level. We test our hypotheses with data on Chinese public firms from 2008 to 2019. Data analysis results show both direct effect of finance shared services on profitability and mediating effect of working capital efficiency. This study expands our understandings about impacts of shared services, and contributes to empirical research in IT business value.

Opening the black box of big data sustainable value creation: the mediating role of supply chain management capabilities and circular economy practices

PurposeThis article examines the mechanisms through which big data analytics capabilities (BDAC) contribute to creating sustainable value and analyzes the mediating roles that supply chain management capabilities (SCMC), as well as circular economy practices (CEP), play through their impact on sustainable performance.Design/methodology/approachFollowing a literature review, a serial mediation model is presented. Hypotheses regarding direct and mediating relationships are tested to determine their potential for sustainability impact and circularity. Partial least squares structural equation modeling (PLS-SEM) has been applied for causal and predictive purposes.FindingsThe results indicate that big data analytics capabilities do not have a direct positive impact on sustainable performance but influence indirectly through SCMC and CEP.Originality/valueAlthough some authors have addressed the associations between IT business value, supply chain (SC), and sustainability, this paper provides empirical evidence related to these relationships. Additionally, this study performs novel predictive analyses.

Information technology investment and digital transformation: the roles of digital transformation strategy and top management

PurposeIn the context of the digital economy, information technology (IT) investment has become a necessary way for enterprises to transform digitally. However, why and how IT investment can enhance digital transformation is lacking in the literature. Based on the resource-based view (RBV), this study explored the impact mechanism of IT infrastructure on the digital transformation of enterprises from the perspective of the digital transformation strategy. Further, this study examined the moderating role of top management on the relationships between IT infrastructure and digital transformation strategy and between digital transformation strategy and enterprise's digital transformation.Design/methodology/approachThrough a questionnaire survey of Chinese enterprises, 180 sample data were collected, and the partial least squares-structural equation modeling (PLS-SEM) method was used to test the hypothesis.FindingsDigital transformation strategy fully mediates the relationship between IT infrastructure and enterprise digital transformation. Furthermore, top management has a significant positive moderating effect on the relationship between IT infrastructure and digital transformation strategy, as well as the relationship between digital transformation strategy and digital transformation.Originality/valueThis study explores the moderating role of top management in the relationship between IT and enterprise performance, as well as the mediating role of digital transformation strategy in the relationship between IT infrastructure investment and digital transformation performance. As a result, the study adds significantly to the body of knowledge on IT business value, digital transformation and strategic management. The authors' findings can help update managers' perceptions of IT value and provide theoretical guidance on deriving digital transformation performance from IT infrastructure investments.

The effects of unemployment and inflation rates on the business value of information technology and economic performance: The partial adjustment valuation approaches

Equipped with the one-equation theory of partial adjustment (PA) under the constant speeds of PA assumption (Nerlove, 1958) and the two-equation theory of PA under the dynamic and variable speeds of PA assumption (Lin & Kao, 2014), this paper applies the constant PA speeds (Lin et al., 2010) and dynamic PA speeds (Lin & Kao, 2014) PA valuation (PAV) approaches to analyze the grand research issue (for three research questions), namely, how IT and two important macroeconomic variables, unemployment rate and inflation rate, affect the country's performance jointly and separately from a global perspective. The ten research models are fitted into a panel data sample composed of 11 countries (Canada, France, the United Kingdom, the United States, Australia, Belgium, Denmark, Greece, Norway, Portugal, and Spain) over the period from 1993 to 2011. The results reveal that the IT productivity paradox remains in some developed countries; IT payoffs hinge on the exploitation of available complementary resources; and the complementarity and substitutability relationships between IT and unemployment and inflation rates exist.

Assessing the Connections among Top Management Support, IT Assimilation, and the Business Value of IT: A Meta-Analysis

Scholars and practitioners have long tried to understand the antecedents and consequences of information technology (IT) assimilation. Studies suggest that top management support is an important driver of IT assimilation; however, this broad takeaway provides little substantive guidance to researchers and practitioners. We also have a limited understanding of whether and when IT assimilation creates business value. We take stock of this literature with a meta-analysis. We found that top management support is positively related to IT assimilation, and assimilation is in turn positively related to the business value of IT. We also found that explicit support does not have any special effect on IT assimilation (compared to implicit support) and may not be related to business value at all. However, our results indicate that IT assimilation has a stronger effect on business value at the process level (versus firm level) and for enterprise IT innovations (versus function IT innovations). Finally, we found that support-assimilation and assimilation-value relationships are stronger in high (versus low) power distance cultures. Our collective findings can facilitate future research and help practitioners navigate IT assimilation initiatives.

Dynamic Influences of FDI and R&D Expenditures on IT Business Value: An Empirical Test from China

Information technology (IT) has become common in various economic and social fields, accompanied by the objective of facilitating the development of human society. However, the business value of IT has always been uncertain, with the IT “productivity paradox” problem becoming a core research topic. Previous studies on this issue have largely ignored the influences of national characteristics, such as foreign direct investment (FDI) and research and development (R&D) expenditure, on the business value of IT. To address this research gap, this study examined the dynamic influences of FDI and R&D expenditures on the business value of IT. Based on the assumption that the adjustment speed of economic growth is affected by both FDI and R&D expenditures, we established a partial adjustment model of dynamic adjustment speed and the individual and combined effects of FDI and R&D expenditures during the period from 2000 to 2017 to empirically examine the economic performance of China and its “productivity paradox” problem. The findings revealed that the individual and combined effects of FDI and R&D expenditures significantly improved the adjustment speed and economic performance of China during that period, that IT significantly influenced economic growth but did not improve economic performance, and that an IT “productivity paradox” existed in China at that time. In addition, IT-driven changes in economic performance could be compensated for or replaced by FDI and R&D expenditures, suggesting that these two factors have a substitutive or complementary effect on IT-driven changes. Therefore, the business value of IT business value was not determined by IT itself; rather, the important effects of national macroscopic factors, including FDI and R&D expenditures, must be taken into account.

Understanding Cross-Level Interactions of Firm-Level Information Technology and Industry Environment

This article contends that although much research on the business value of IT focuses on firm-level impacts, studies have begun incorporating industry-level variables as explanatory factors of interest to offer better contextualized explanations for the differences in value firms obtained from their IT across different industries. The authors present a multi-level model of IT value where industry-level and firm-level factors jointly determine the value a firm obtains from its IT. By using a nested model to examine industry to firm interactions, they are able to control for problematic violations of statistical assumptions that are likely to bias estimates from conventional methods. Their analysis shows that all of the industry factors we examined had significant interaction effects. Specifically, industry concentration, industry growth, industry capital intensity, industry outsourcing, and presence in service sector significantly impact firm-level IT value. More interestingly, the authors find these impacts manifest not as mean differences between industries, but rather as interactions with firm-level effects.