High Information Technology Research Articles

Clients’ digitalization, audit firms’ digital expertise, and audit quality: evidence from China

PurposeThis study aims to examine whether clients’ degree of digitalization and audit firms’ expertise in information technology (IT) influence audit quality (AQ).Design/methodology/approachData of Chinese A-share firms listed on the primary board of the Shanghai and Shenzhen stock exchanges from 2011 to 2019 are taken as the sample. All the data are obtained from the China Stock Market and Accounting Research. Clients’ digitalization is determined using the keywords “AI technology,” “blockchain,” “cloud computing,” “big data technology” and “digital technology.” Auditor firm’s digital expertise is determined by the proportion of higher IT expertise. As the proxy for AQ, this study uses audit fees, given that its quantum reflects the effort auditors expend that in turn affects the AQ.FindingsA fixed-effect regression model shows that clients with high digitalization attain AQ. This study also finds a significant and positive coefficient of audit fees, indicating that AQ is high in the same situation if an audit firm’s IT is mature and developed. Furthermore, results confirm the moderating effect of clients’ digitalization and auditors’ expertise and on AQ. Auditors’ expertise in IT mitigates the audit risk and increase AQ.Originality/valueFindings can enhance AQ and corporate governance literature by clarifying how external audits must evolve through digitalization and incorporating newly developed digital tools such as big data, analytics, artificial intelligence and robotic process automation. This study also provides important insights regarding how the development of new digital tools allow the audit profession to perform as a corporate governance mechanism.

The pivotal factors of IT projects' success – Insights for the case of organizations from the Federation of Bosnia and Herzegovina

This research aims to investigate the circumstances and possible reasons for a very high and rather unexpected success rate of Information Technology (IT) projects implemented in the Federation of Bosnia and Herzegovina (F BiH). For that purpose, the existing literature was reviewed thoroughly, and appropriate research design was formulated. In order to answer the research questions posed, a questionnaire was developed and sent to 400 companies in the F BiH that meet the defined business profile, yielding 62 valid responses. For the purpose of data analysis, a multivariate analysis of variance (MANOVA) was employed. The obtained results show that keeping the project size small significantly increases the odds for achieving IT project success, regardless of the organizational maturity level in project management. In addition, the higher the organizational maturity level in project management, the higher IT projects success ratio. Results also revealed that the differences between IT projects’ success ratio of different groups of organizations are primarily induced by the time and costs project constraints, but not with the project scope.

The Influence of Gamification and Information Technology Identity on Postadoption Behaviors of Health and Fitness App Users: Empirical Study in the United States.

BackgroundThe use of health and fitness apps has been on the rise to monitor personal fitness and health parameters. However, recent research discovered that many users discontinue using these apps after only a few months. Gamification has been suggested as a technique to increase users’ interactions with apps. Nevertheless, it is still not clear how gamification mechanisms encourage continued use and inspire user self-management.ObjectiveThe main objective of this study was to articulate how gamification mechanisms in studies of designing and using health and fitness apps can contribute to the realization of information technology (IT) identity and positive behavioral outcomes. The broader goal was to shed light on how gamification mechanisms will translate into positive use behaviors in the context of mobile health apps.MethodsData were collected from 364 users of health and fitness apps through an online survey to empirically examine the proposed model.ResultsBased on identity theories, this study suggests the fully mediating role of IT identity to describe how gamification elements can lead to continued intention to use health and fitness apps, and increase users’ tendency for information sharing through the apps. The findings indicate that perceived gamification can increase users’ IT identity. In turn, a higher IT identity would encourage users to continue using the apps and share more personal health information with others through the apps.ConclusionsThe results of this study can have practical implications for app designers to use gamification elements to increase users’ dependency, relatedness, and emotional energy associated with health apps. Moreover, the findings can have theoretical contributions for researchers to help better articulate the process in which gamification can be translated into positive use behaviors.

Governing information technology (IT) investment: A contingency perspective on organization’s IT investment goals

Using contingency theory, we argue that there is not a uniform approach for companies to govern information technology (IT) investments. Rather, the level of governance over IT investments is contingent upon the organization’s goals for its IT investments. We find that Australian organizations with both operation- and market-focused IT investment goals (i.e. dual-focused IT goals) demonstrate higher IT investment governance (ITIG) levels than those with less focused IT goals. We also document that dual-IT-focused firms that do not implement high levels of ITIG underperform. Our study informs business executives, boards of directors, and other practitioners interested in governance implementations over IT investments. JEL Classification: M1

The Role of Banks' Technology Adoption in Credit Markets during the Pandemic

This paper shows that higher information technology (IT) adoption by banks led to a larger increase in corporate lending in the months following the COVID-19 outbreak in Italy. Examining banks with heterogeneous degrees of IT adoption, we investigate the dynamics of credit and its allocation across firms using a new database with detailed information on bank IT expenditures and propensity to innovate matched with bank-firm level data on credit growth before and during the pandemic. Using a difference-in-differences identification strategy, we find that banks with higher intensity of IT adoption increased their credit more than others during the pandemic. The increase was concentrated in term loans extended to smaller and financially sounder companies; the effect was stronger in the initial phase of tighter restrictions to firm activity and individual mobility, and more significant for undertakings active in the sectors most affected by the shock. We provide evidence that these results are driven by both bank's ability to offer credit entirely on-line and bank's use of digital technologies for creditworthiness assessment. We find that physical proximity between borrowers and lenders remained important for credit provision during the pandemic, but only when combined with high level of IT adoption.

Understanding Security Vulnerability Awareness, Firm Incentives, and ICT Development in Pan-Asia

ABSTRACT This paper investigates how the awareness of a security vulnerability index affects firms’ security protection strategy and how the information awareness effect interacts with firm incentives and country-wide information technology (IT) development level. The security index is constructed based on outgoing spams and phishing website hosting, which may serve as an indicator of a firm’s security controls. To study whether security vulnerability awareness causes firms to improve their security, we conducted a randomized field experiment on 1,262 firms in six Pan-Asian countries and regions. Among 631 randomly selected treated firms, we alerted them of their security vulnerability index and their relative rankings compared to their peers via advisory emails and websites. Difference-in-differences analyses show that compared with the controls, the treated firms improve their security over time, with a statistically significant reduction of outgoing spam volume according to one of the data sources but not phishing website hosting. However, a statistically significant reduction in phishing website hosting was observed among non-web hosting firms, suggesting that firms’ underlying incentives play an important role in the treatment effect. Lastly, exploiting the multi-country nature of the data, we found that firms in countries with high information and communications technology (ICT) development are more responsive to our intervention because they have higher IT capabilities and more resources to resolve security issues. Our study provides cybersecurity policymakers with useful insights on how firm incentives and ICT environments play roles in firms’ security measure adoption.

What drives new product innovation in China? An integrative strategy tripod approach

AbstractThis study explores the determinants that drive new product innovation by employing the integrative strategy tripod approach. We analyze data from the World Bank Enterprise Survey on 1,692 manufacturing firms in China using a novel methodological approach (a fuzzy set qualitative comparative analysis) that focuses on multiple conjectural causations. Interestingly, our findings suggest that R&D investment alone is not a sufficient condition to facilitate a firm's product innovation, but stable government policy is a necessary condition for R&D investment. Even with a low level of R&D investments, it can achieve innovation if those investments are made in conjunction with high technology information system investments for supporting customer relationships. Finally, we find that when firms perceive informal competition to be a significant obstacle to their operations and R&D investment, they tend to engage in corrupt actions to create innovation. Implications for research and practice are provided.

Do Increases in State Minimum Wages Accelerate Technology Adoption?

This paper studies the effects of state minimum wage increases on information technology (IT) budget at the establishment level in the United States. We find establishments in states that experience significant minimum wage increases on average allocate $62,342 more per year to IT budgets. The effects are heterogeneous across industry, firm, or establishment characteristics. Additional evidence suggests that significant state minimum wage increases lead to higher IT capital. Our results suggest that establishments change production technology in response to increases in the wage floor.

European Hospitals' Transition Toward Fully Electronic-Based Systems: Do Information Technology Security and Privacy Practices Follow?

BackgroundTraditionally, health information has been mainly kept in paper-based records. This has deeply changed throughout approximately the last three decades with the widespread use of multiple health information technologies. The digitization of health care systems contributes to improving health care delivery. However, it also exposes health records to security and privacy breaches inherently related to information technology (IT). Thus, health care organizations willing to leverage IT for improved health care delivery need to put in place IT security and privacy measures consistent with their use of IT resources.ObjectiveIn this study, 2 main objectives are pursued: (1) to assess the state of the implementation of IT security and privacy practices in European hospitals and (2) to assess to what extent these hospitals enhance their IT security and privacy practices as they move from paper-based systems toward fully electronic-based systems.MethodsDrawing on data from the European Commission electronic health survey, we performed a cluster analysis based on IT security and privacy practices implemented in 1723 European hospitals. We also developed an IT security index, a compounded measure of implemented IT security and privacy practices, and compared it with the hospitals’ level in their transition from a paper-based system toward a fully electronic-based system.ResultsA total of 3 clearly distinct patterns of health IT–related security and privacy practices were unveiled. These patterns, as well as the IT security index, indicate that most of the sampled hospitals (70.2%) failed to implement basic security and privacy measures consistent with their digitization level.ConclusionsEven though, on average, the most electronically advanced hospitals display a higher IT security index than hospitals where the paper system still dominates, surprisingly, it appears that the enhancement of IT security and privacy practices as the health information digitization advances in European hospitals is neither systematic nor strong enough regarding the IT-security requirements. This study will contribute to raising awareness among hospitals’ managers as to the importance of enhancing their IT security and privacy measures so that they can keep up with the security threats inherently related to the digitization of health care organizations.

On Buyer Selection of Service Providers in Online Outsourcing Platforms for IT Services

The Internet has presumably created a level playing field that allows any service provider across the globe to compete for contracts on online outsourcing platforms for information technology (IT) services. In this paper, we empirically examine (a) how country (language, time zone, cultural) differences and the country’s IT development affect buyers’ selection of service providers in online outsourcing platforms; and (b) how the reputation of service providers moderates the proposed effects of country differences and the country’s IT development. We integrated a unique data set formed by a sample of 11,541 software development projects from an online outsourcing platform matched with archival sources on the language, time zone, culture, and IT development of countries. Since price is typically endogenous in any supply demand system, we used the exogenous variation of the normalized exchange rate of the currency among countries, as a “cost-shifter” type instrumental variable (IV) for econometric identification. Our panel data analyses results (both with and without IV) show that buyers are negatively affected by country differences in terms of language, time zone, and culture, and prefer service providers from countries with higher IT development. Notably, the reputation of service providers attenuates the negative effects of language and cultural (but not time zone) differences, while it substitutes the positive effect of the country’s IT development. We discuss the study’s theoretical and managerial implications for understanding the global dynamics of online outsourcing platforms and better designing these platforms. The online appendix is available at https://doi.org/10.1287/isre.2017.0709 .

Knowledge diversity and firm performance: an ecological view

Purpose Knowledge has been considered a crucial organizational asset for gaining competitive advantages. It is critical for a firm to maintain a knowledge composition that is productive. This study aims to examine the applicability of the diversity–stability principle in ecology to knowledge management and further investigate the impact of knowledge diversity on firm performance. Design/methodology/approach A theoretical framework for knowledge diversity and firm performance is proposed; a questionnaire survey was conducted to evaluate the research framework. Fifty-eight valid responses from experts were collected to measure knowledge strength and diversity of 20 enterprises in four industries, and financial indexes of the 20 enterprises from 2008 to 2012 were collected to analyze the research model. Findings The results show that higher information technology (IT) capabilities in a firm lead to higher levels of knowledge strength and diversity. The strength and diversity of knowledge in a company can improve average company performance and reduce performance variations. Research limitations/implications This paper presents a new perspective that applies the ecological concept of diversity to examine the value of knowledge in organizations. The findings expand our understanding of the role of IT and knowledge in organizational performance. A limitation is that the sample size is relatively small, which may limit the generalizability of the findings. Practical implications CEOs and chief knowledge officers can apply the findings herein to assess their organizational knowledge profiles and maintain a healthy knowledge ecology in strategic planning. They should be aware that both knowledge strength and knowledge diversity are crucial to the stability of firm performance. Originality/value The ecological view of knowledge management stresses the importance of maintaining a healthy intensity and diversity of knowledge at the macro level and indicates a new direction for knowledge management.

Information Technology Controls Quality and Audit Fees: Evidence From Italy

This study analyzes the impact of Information Technology (IT) Controls quality on control risk and audit fees. The impact is expected to occur when regulation increases sensitiveness to audit risk assessment. The research focuses on IT Controls as part of Internal Control over Financial Reporting, particularly on scoping quality, segregation of duties, and Controls framework compliance. The research was conducted with a questionnaire on a population of Italian listed companies. We find that audit fees are lower for higher IT scoping quality, IT Controls segregation of duties, and IT Controls framework compliance. The overall conclusion is that IT Controls quality is related to lower control risk, audit fees, and audit effort.

Trends in Commercial-Off-The-Shelf vs. Proprietary Applications

ABSTRACT This study examines factors valued by IS managers in deciding if COTS software is a viable alternative to proprietary software. The results indicate managers who anticipate increased usage of COTS packages in 5 years used the same top three factors in the formation of their decisions to adopt COTS as their colleagues who anticipated either zero change in COTS usage or an increased usage of proprietary software used in deciding not to adopt COTS software. Managers anticipating increased COTS usage had a statistically significant higher value for each of those items compared to managers not anticipating growth in COTS software. Keywords: Commercial-Off-The-Shelf, Proprietary, Application Software INTRODUCTION The average information technology (IT) investment reported by organizations participating in the Society for Information Management's 36th Anniversary IT Trends Study was 5.3% of their gross revenue (Kappelman, et al., 2016) and IT contributes up to 50% of total capital costs (Applegate et. al. 2009). IT is essential to survival for most businesses. In the United States (US), President Obama requested a decrease of 2.9 percent in spending for IT projects for fiscal year 2015 bringing total requested IT spending for the United States Government to $79 billion (Information Week, 2014). This savings of $2.4 billion (2.9 percent) attributed to consolidation of commodity IT products and services, reduction of duplication, and cutting waste. Between 2011 and 2014 the Federal Government IT spending increased from $79.4 billion to $81.4 billion. Global spending on IT is expected to have a compound annual growth rate of 3.3 percent per year from 2015-2020 with IT products and services growing from almost $2.4 trillion in 2015 to over $2.7 trillion in 2020 (IDC, 2016). This increase is likely to be driven by demand for new technologies such as cloud computing, software as a service (SaaS) and Enterprise Resource Planning (ERP) packages among others Luftman et al. (2015). Businesses are becoming increasingly reliant upon information technology and are likely to continue to be so into the future. Driven by customer demands and desires for increased effectiveness and efficiency businesses are increasing usage of software solutions. The increased usage is fueling a growth in demand for IT applications and increasing the need for software both in the proprietary and commercial-off-the-shelf (COTS) domains and across ERP and non-ERP use cases. As an example, customers increasingly expect to be able to utilize smart phones and other mobile devices to accomplish an increasing array of tasks that were not previously possible with access to a full computer. This increased demand for more useful and powerful applications permeates an industry to the point that it becomes a basic expectation and any business not keeping current in their technological offerings is at a competitive disadvantage. Cloud computing, IT resource price decline, decreased costs of storage, and the increased processing power available at an affordable price point allows many small and medium size companies to afford IT applications for their organizations when they previously would not have been able to do so (Srinivasan 2013). These factors and others lead to a trend of annual increases in IT investments worldwide. Increased maturity in business intelligence, mobile computing, web-enabled transactions, and other areas are being seen as applications whose usage is beneficial for an increasing percentage of organization. However, limited available of resources is projected to lead to an increased reliance on cloud computing and outsourcing/offshoring services. Companies using cloud computing and/or offshoring/outsourcing, will have a decreased need for employees with higher IT skills (Himmel and Grossman, 2014). These trends in aggregate are expected to lead to a growth in the need for end user computing (EUC), the development and use of information systems by people outside the IS department (McLean 1979), within the organizations (Agrawal, et al. …

Owner’s Support, IT Sophistication and IT Adoption in Indonesian Manufacturing SMEs

The importance of technology, especially information technology (IT), to businesses is widely accepted. But, different from large enterprises, small and medium enterprises (SMEs) with their limited resources adopted IT slowly. Literature on technology adoption suggests that organizational readiness is one of many factors that determine the adoption of technology. This paper relates IT adoption in Indonesian manufacturing SMEs with their IT readiness represented by owners support and IT sophistication they have. In this paper, the variety of IT adoption by SMEs was explored using business process approach. The support from SMEs owner represented by owner’s IT knowledge and resource allocation. IT sophistication included management level supported by IT, IT skill and IT innovativeness of SMEs staff. Three propositions were formulated and explored using data collected from 320 SMEs. Using cluster analysis, these SMEs were classified into five type of IT adoption based on three business focus (supplier, internal and customer): early adoption, internal focus adoption, customer focus adoption, internal-customer focus adoption and balanced adoption. The results suggests wider IT adoption requires greater support from the owner and higher IT sophistication.

Development of Communication among the Members of the Youth Policy

The article describes the main activities of Mari State University (city Yoshkar-Ola) to create the homogeneous cultural space under the youth policy. One of such activity was the creation of the united information and communication portal “Muraveynik” (“Anthill”) on the basis of the university, which purpose is the consolidation of Russian students in the united information social and cultural space. Based on the successful experience of the realization of information and communication projects in Mari State University, it is instructive to spread this model of interaction on the national basis. The given resource has to unite all the information related to the realization of the youth policy in the country and allows the youth and the students to orient effectively by choosing educational, professional, leisure strategies of the youth. The article also deals with the experience of the youth policy, the social studies, the volunteering in Mari State University which allowed to apply successfully the latest technologies for the purposes of the social integration of the region and the country as a whole. The group of the authors is the direct creator and coordinator of the presented model of the social and cultural, communicative interaction in the youth and the students space and hopes to find the associates to create safe, tolerant, high-technology information space to secure the cooperation among different universities and countries.

Industry-Level Analysis of Information Technology Return and Risk: What Explains the Variation?

Motivated by the wide dispersion in the returns on the use of information technology (IT) across industries, we conduct an industry-level examination of IT return and risk, focusing on the moderating role of industry competition, regulation, and technological change. We address the following research questions: What is the impact of IT investment on the return and risk dimensions of industry financial performance? How do industry characteristics moderate the relationship between IT investment and industry performance? Our analysis of these questions finds that higher levels of industry competition are associated with higher IT productivity (contribution of IT to value-added output), lower IT profitability (contribution of IT to industry average return on assets [ROA]), and higher IT risk (contribution of IT to ex ante variability of ROA). This is consistent with the notion that competition induces riskier IT investments, despite the fact that returns tend to be competed away. Higher levels of industry regulation are associated with lower IT returns in both productivity and profitability, but also lower IT risk. Finally, a higher rate of technological change induces both higher IT returns and higher IT risk. A variety of tests indicate that our results are robust. Our results shed light on factors that drive variation in IT performance across industries, and provide useful industry-level performance benchmarks of the return and risk impacts of IT investments.

The Effect of Board of Directors’ IT Awareness on CIO Compensation and Firm Performance

ABSTRACTChief information officers (CIOs) play increasingly strategic roles in firms in this competitive global economy, which is now largely powered by information technology (IT). However, research has shown a lack of board of directors’ oversight on CIO‐ and IT‐related issues. Drawing on agency, resource dependence, and alignment theories, we investigate the effect of board of directors’ IT awareness on CIO compensation structure and firm performance. We conduct cross‐sectional time series analyses of data collected from various sources. Our study underlines three important findings. First, we show that some commonly known executive compensation determinants, such as individual characteristics and governance structure, do not have significant effects on CIO compensation structure. Second, with regard to CIO compensation structure, firms respond to increasing information asymmetry differently according to the level of IT awareness of their boards. Finally, firms perform better when their boards have higher levels of IT awareness, and this positive effect of IT awareness is considerably larger in IT intensive industries. Overall, our study provides empirical support for the important role of boards’ IT awareness in shaping CIO compensation and improving firm performance. Our results suggest that boards with functional area knowledge—or higher IT awareness in this case—can more effectively monitor and better incentivize executives, and consequently lead to better firm performance.

Information Technology Project Management and Project Success

One of the most important issues for organizations and information technology professionals is the success of information technology (IT) projects. This study reviews a survey of financial executives and examines their views on aspects of project management and project success. First, it was found that overall systems development projects are viewed as being successful by organizations. Next, a series of analyses were performed to assess several variables’ impact on IT project success. Skilled project measurement was found to result in higher IT project success. Restrictions on IT application development were found to correlate to lower IT project success. The most important project consideration did not affect project success. Finally, a significant positive relationship was found between the IT project success and overall IT returns. The implications, limitations, and conclusions of these findings are discussed. The study can be used as a basis for further exploration on project management success, influencing variables, and motivators. The findings can also be used to guide management teams in project management decisions to maximize returns to their organizations. The paper studies a large secondary data sample set, which empirically reviews corporations’ experiences with project management. In addition, it explores variables influencing overall project management success perception.

Management Accounting Change: ABC Adoption and Implementation

The current research tries to contribute to the successful design and implementation of ABC in the context of Jordanian Manufacturing Companies. In order to satisfy the research objectives, both quantitative and qualitative data are gathered. For the quantitative data, a questionnaire survey was developed for the determination of the present scenario involving ABC adoption and implementation. For the qualitative one, semi-structured interviews were utilized to find out the factors impacting the adoption and implementation of ABC. Data analysis included within company and cross-company analysis . ABC’s adoption and implementation rate were determined through the use of three criteria; namely, adopters, implementers and users or implementers. The primary findings revealed that ABC implementation in the context of Jordanian Manufacturing Companies is approximately 19.5% measured according to the third criteria which is implementers or users. Findings from the semi-structured interviews reveal that factors including fashion, forced decision, fad and efficiency are directly related to ABC implementation decision in the target companies. In addition, factors that both facilitate and motivate ABC implementation are: top management support, non -accounting ownership, higher information technology, education, globalization of consumer, increased competition, growing costs, allocation problems, inability of the traditional cost systems to provide relevant information in the new environment and financial crisis. The findings from the interviews also revealed that the barriers to ABC implementation are associated to behavioral and technical problems.

Leaders Exhibiting High Emotional Intelligence Are More Dedicated to Their Job Performance

The purpose of this study was to identify the effect of information technology leaders’ emotional intelligence on subordinate job performance. Participants consisted of information technology leaders, and were recruited from the Association for Information Technology Professionals (AITP) and the Information Technology (IT) Specialist group in LinkedIn (a business-oriented network website). A quantitative, correlational approach was taken by an online administration of two validated instruments—the Emotional Quotient Inventory (EQ-i) and Van Scotter and Motowidlo’s measures for contextual performance (interpersonal facilitation and job dedication). Findings indicated that there was a positive relationship between IT leaders’ emotional intelligence scores and subordinates’ job performance ratings. Specifically, higher IT leaders’ general mood scores, and optimism scores are associated with subordinates’ higher interpersonal facilitation and job dedication scores. Further, results provided insight on IT leaders’ EI training needs, career development, and guidelines for areas of improvement.