Impact Of Information Technology Investment Research Articles

Economic Impact of Information Technology in Firms with Different Ownership Structures

This study seeks to extend the understanding of research in business value of Information Technology (IT) domain by investigating the role of ownership structure in economic impact of IT following contingency theory perspective. The study is set in India and focuses on three ownership types: state-owned enterprises (SOEs), privately-owned enterprises (POEs), and foreign-invested enterprises (FIEs). Using the data of 459 firms in India from 2007 to 2010, this paper employs the structural equation modeling based path analysis to study the moderating effect of ownership structure on the relationships between IT investment and operating expenses as well as IT investment and profit. The empirical results show that IT investments enable firms in reducing their operating expenses, without contingencies related to ownership structure. However, impact of IT investment in improving profit is contingent on ownership structure such that the impact decreases for POEs, FIEs, and SOEs in that particular order.

Blunting Damocles' Sword: A Longitudinal Model of Healthcare IT Impact on Malpractice Insurance Premium and Quality of Patient Care

Prior studies on the business value of information technology (IT) mainly focus on the impact of IT investments on productivity and firm profitability. Few have considered its implication on expected and actual product or service quality. This paper fills this gap by investigating the impact of past healthcare IT (HIT) expenditure on the malpractice insurance premium (MIP) and the moderating effect of past HIT expenditure on the relationship between past MIP and current quality of patient care in a longitudinal model. Based on archival panel data on costs, operations, and patient care outcomes of 66 hospitals in the U.S. state of Washington from 1998 to 2007, we find that past HIT expenditure is negatively associated with MIP, supporting our argument that HIT provides value that is anticipated by insurers and is captured by a change in MIP. We find that past HIT is positively associated with quality of patient care. We also find that past MIP is positively associated with quality of patient care, supporting the premise that hospitals respond to MIP by making risk mitigation efforts. However, we find that past HIT moderates this relationship negatively, suggesting a reliance on HIT at the expense of risk mitigation.

The Impact of RFID Investment on Complex Product in Three-Level Assembly Supply Chain

Motivated by the complex product with the feature about error-prone assembly system and supply chain inventory inaccuracy, this paper elaborates on the impact of information technology investment on complex product by establishing a three-stage supply chain model involving two suppliers, one manufacturer, and retailer which carried out Stackelberg games. In addition, it not only compares the manufacturer and the retailer’s optimal decision and maximum profit under the situation of the information asymmetry and free information sharing, but also analyzes their market behavior and changes in market performance. Meanwhile, it points out that the downstream in supply chain masters more information about market demands compared to the upstream one. The optimal cost threshold values of technology investment are also examined both for the centralized and the decentralized scenarios utilizing quantitative and modeling methods. By analyzing and comparing the optimal profit with or without investment on information technology, it establishes a supply chain coordination model which boosts the application of information technology. At the same time, it offers the conditions on which the upstream and downstream enterprises can coordinate with one another. The results of this paper have contributed significantly to making the price and ordering decisions on whether RFID should be adopted among members of the supply chain. Finally, we present numerical analyses, and several extensions of the model are considered as well.

Linking the Impact of IT Investments to Productivity and Profitability

Implementing IT (information technology) systems such as ERP (enterprise resource planning) requires huge investments. Measuring the impact of these investments on productivity and profitability is extremely important for business managers. Many studies have failed to show the direct relationship between IT investments, organizational productivity and profitability, a phenomenon known as productivity paradox. The failure might relate to problems with the measurement techniques. This paper describes a measurement model, known as the PPP model (“Profitability = Productivity + Price Recovery”), that can fill the gap and show a link between IT investments, productivity, and profitability. The spreadsheet-based implementation of the PPP model, using multi-period data, generates performance trend charts of productivity, price recovery, and profitability. These performance charts provide a multi-period perspective to managers in identifying and understanding the impact of IT investments. This model is useful to managers considering heavy investments in IT as well as for managers interested in assessing their organizational performance and taking corrective actions in a timely manner.

Analysis And Measurement Of The Impact Of Information Technology Investments On Performance In Mexican Companies: Development Of A Model To Manage The Processes, Projects And Information Technology Infrastructure And Its Impact On Profitability

In Mexico, companies invest enormous resources in information technology (IT), with little evidence of the latters effectiveness. Company directors struggle with gauging how effective or ineffective making these investments truly is, given the lack of instruments of measurement by which to establish, for instance, an internal rate of return or a period of recovery on investments. There is also no evidence by which to link IT investment to improvements in a companys performance or profitability. While several American and Australian universities have developed studies that address these issues, for the most part these are limited to their respective countries and in some cases to Canada and Europe. Thus, there is a lack of empiric evidence in the Mexican scenario. Being able to analyze and measure the impact of IT investments is an important first step into making these resources more efficient. Based on the following analyses, one will identify the variables that intervene in successful and/or unsuccessful management of processes and projects, as well as in the administration of IT infrastructure.

The impact of Information Technology Investment on Firm Production Output in Service Industry.

The impact of Information Technology Investment on Firm Production Output in Service Industry.

A study of the impact of information technology on firm performance: a flexible production function approach

AbstractMost previous studies of the impact of information technology (IT) on firm performance have relied on the Cobb–Douglas production function, which makes unrealistic assumptions. These include assuming that (1) the scale elasticity, i.e. returns to scale, is constant throughout the entire output range; (2) the elasticity of substitution between inputs is one, whereas it can be anywhere from zero to infinity in practice; and (3) there are no complex interrelationships between inputs, i.e. no squared or product terms. The translog production function (used in two previous studies) does not make these assumptions and is therefore more accurate. However, the two previous studies found no significant difference between the two. This research has extended previous work on the impact of IT investments by providing more accurate results in some areas and new findings in others. IT's importance is shown to be much greater than previously thought. The translog function is used to demonstrate that the productivity paradox does not hold (i.e. both IT labor and capital indeed have a significant impact on firm revenues), but with considerably different results, i.e. the impact of IT is markedly more significant than that obtained from the Cobb–Douglas. Another interesting finding is that of scale elasticity. Our results show that this is less than 1, implying decreasing returns to scale of output. Finally, the substitutability between inputs was determined, which is not possible with the Cobb–Douglas. It was found that the partial elasticities of substitution for IT labor with IT capital and non‐IT labor were quite substantial.

Differential effects of IT investments: Complementarity and effect of GDP level

With the rapid growth of Information Technology (IT) investments, the issue of measuring the business value or impact of IT investments has received increased attention from both academia and practitioners. However, the empirical results of the studies regarding the value of IT investments are inconclusive. This paper uses the knowledge management and resource-based perspective, to examine how the three areas of IT investment—hardware, software, and internal spending affect GDP 4 4 In this paper, the country level performance is defined as gross domestic product as in the previous study ( Dewan & Kraemer, 1998, 2000). in terms of complementarity and GDP level. The results indicate that software investment is important and contributes to improving the gross domestic products and to maximizing the utilization of the hardware investment. The study also found that the complementarity between the three types of IT has a differential effect on GDP according to GDP level. Further results and implications are discussed.

Revisiting the Impact of Information Technology Investments on Productivity

This article revisits the relationship between IT and productivity, and investigates the impact on information technology (IT) investments. Using the MARS techniques, we show that although IT Stock is the greatest predictor variable for productivity Ko, M.; Clark, J.G.; Ko, D.(Value Added), it is only significant as an interaction variable, combined with Non-IT Capital, Non-IT Labor, Industry, or Size.

The impact of IT investment on firm performance in China: An empirical investigation of the Chinese electronics industry

Over the past three decades, the impact of information technology (IT) investments on firm performance has been the subject of active research. Although many studies have shown positive and significant benefits derived from IT investment, the findings of almost all these studies are based on data collected in developed countries. Few studies have been conducted to validate these results and to determine whether or not they are still applicable in developing countries. This study tries to investigate the effects of IT investment on firm financial performance in the electronics industry of China, still classified as a developing country, and compare it with the United States. Findings show that IT investment has a positive impact on firm performance in China. Moreover, the impact in China is not different from what occurred in the United States in terms of direction and the size against the assertion of previous studies and expectations.

Reexamining the impact of information technology investment on productivity using regression tree and multivariate adaptive regression splines (MARS)

As health care costs increased significantly in the 1990s, investments in information technology (IT) in the health care industry have also increased continuously in order to improve the quality of patient care and to respond to government pressure to reduce costs. Several studies have investigated the impact of IT on productivity with mixed conclusions. In this paper, we revisit this issue and re-examine the impact of investments in IT on hospital productivity using two data mining techniques, which allowed us to explore interactions between the input variables as well as conditional impacts. The results of our study indicated that the relationship between IT investment and productivity is very complex. We found that the impact of IT investment is not uniform and the rate of IT impact varies contingent on the amounts invested in the IT Stock, Non-IT Labor, Non-IT Capital, and possibly time.

The impact of information technology on organizational efficiency in public services: a DEA-based DT approach

This study attempts to examine the impact of information technology (IT) on organizational efficiency in public services. We propose a new approach to providing the directions of IT investments to improve organizational efficiency. The proposed approach is based on the integrated form of data envelopment analysis (DEA) and decision tree (DT), and composed of two steps. First, DEA is conducted to measure organizational efficiency with the selected inputs and outputs. Second, DT is built based on efficiency scores obtained from DEA and IT factors, as a target variable and predictor variables, respectively. In doing so, we can identify the relative impact of IT investments on organizational efficiency and set priorities to the IT investments to improve efficiency from a view point of each organization. A case study on the Korean local governments is presented to illustrate the usefulness of the proposed approach.

Research Note—The Impact of Information Technology Investments and Diversification Strategies on Firm Performance

As companies continue to make large investments in information technology (IT), questions about how and in what contexts such investments pay off have gained importance. We develop a theoretical framework to explain how IT investments could pay off in the economically significant context of corporate diversification, and empirically find that the performance pay off to IT investments is greater for firms with greater levels of diversification. We also find that the performance payoff to IT investments is greater in related diversification than in unrelated diversification.

Impact of Information Technology Investment on Productivity ofBusiness Organization in Government

Impact of Information Technology Investment on Productivity ofBusiness Organization in Government

Impact of Information Technology Investment on Productivity and Profitability: The Case of a Leading Jordanian Bank

Over the past few years, there has been much debate as to whether or not investment in Information Technology (IT) improves productivity and business profitability. Studies at both the industry and firm levels have provided varying answers to this question and different insights into the causes of productivity fluctuation. Recent research into the banking sector has shown that the substantially high returns achieved by most banks are largely due to an increase in their investment in Information Systems (IS) labor, while additional investment in IT capital may have no real benefits. This study examines the effect of IT investment on productivity and profitability by analyzing data from the Arab Bank, one of the leading banks in Jordan, during the period 1985 to 2004. The results indicate that there are substantial returns due to an increase in investment in IT capital, a fact which incentivizes the bank’s management to shift its emphasis in IT investment from labor to capital.

Analyzing the impact of information technology investments using regression and data mining techniques

PurposeMany attempts to justify the business value of increased investments in information technology (IT) have shown mixed results. While findings from earlier studies have been conflicting, recent firm level studies indicate that IT investments have a positive impact on productivity. However, whether IT adds value to organizations is an on going debating issue. Thus, thus it is worth of further investigation.Design/methodology/approachThe paper employs multiple techniques – a regression, regression trees, and regression splines – and integrate the responses provided from each technique.FindingsWhile IT investments have a positive impact on productivity, the impact is conditional and is not uniform but depends on the amounts invested in other related areas, such as non‐IT labor, non‐IT capital, and/or IT investments.Practical implicationsThe IT impact on productivity can be maximized when investments in other related areas are considered together than when they are considered in isolation. Therefore, IT investment decisions should not be made without consideration of the levels of other investments within an organization to avoid any waste in additional investments in IT.Originality/valueWhile most previous studies have studied in terms of its existence or non‐existence of the IT impact, we investigate the conditions under which the IT impact would or would not exist. Thus, our study provides with the opportunity for gaining a deeper understanding of the impact of IT investments on productivity.

IT Business Value Research

Although corporations in the world, especially those in the United States, have spent generously on information technology (IT) and information systems (IS) in recent decades, empirical studies have yielded disappointingly inconsistent findings on the impact of IT investments on firm performance, and the phenomenon of the IT productivity paradox lingers on to this day. A review of the literature on this subject has pointed out several possible reasons underlying such inconsistencies, including data and methodological problems and limitations of research models. Consequently, a process-oriented research model is proposed to mitigate the shortcomings of prior studies. This model incorporates improvements in business process as an independent construct parallel to the capabilities of IT and enterprise systems. Competitive capabilities are included as an intermediate construct to conceptualize the linkage between the independent constructs and the dependent construct of organizational performance. Theories and empirical evidence are drawn from associated management disciplines such as operations management and from a resource-based view of the firm to illustrate and explain that investment in IT and business processes eventually will contribute to organizational performance through the creation and enhancement of competitive capabilities. Finally, the theoretical and managerial implications of this research model are highlighted.

Adoption of Mobile Internet Services: An Exploratory Study of Mobile Commerce Early Adopters

The extent to which investment in information technology (IT) is related to organizational performance and productivity remains an open question in the minds of managers responsible for such investment decisions. Most past research into this relation has been based on cross-sectional analyses of 1-year periods. Attempts to determine relations between IT investment and the associated effect of that investment in such short periods have resulted in mostly mixed or negative findings. This study is thought to be the first to apply a multiyear, cross-sectional analysis. In the research, covering a 3-year period and involving firm-level data for a broad cross-section of U.S. industry, we found positive relations between higher levels of IT investment and selected measures representing organizational performance and productivity. These results, being based on multiyear analysis, are thought to be an important contribution in view of the fact that much of the existing literature in the area has failed to explain conclusively the economic impact of IT investment on organizational performance and productivity.

Information Technology Investments and Organizational Productivity and Performance: An Empirical Investigation

The extent to which investment in information technology (IT) is related to organizational performance and productivity remains an open question in the minds of managers responsible for such investment decisions. Most past research into this relation has been based on cross-sectional analyses of 1-year periods. Attempts to determine relations between IT investment and the associated effect of that investment in such short periods have resulted in mostly mixed or negative findings. This study is thought to be the first to apply a multiyear, cross-sectional analysis. In the research, covering a 3-year period and involving firm-level data for a broad cross-section of U.S. industry, we found positive relations between higher levels of IT investment and selected measures representing organizational performance and productivity. These results, being based on multiyear analysis, are thought to be an important contribution in view of the fact that much of the existing literature in the area has failed to explain conclusively the economic impact of IT investment on organizational performance and productivity.

Using regression splines to assess the impact of information technology investments on productivity in the health care industry

Abstract. This paper explores the impact of information technology (IT) investments on productivity using a new technique, multivariate adaptive regression splines (MARS). We believe that it provides additional insights on the nature of the impact of IT investments on productivity. The results from our study are compared with findings from a previous study that has also used the same data set. While the results of a previous study indicate that IT investments have a positive but uniform impact on productivity, our study suggests that the impact of IT on productivity is not uniform but is contingent on other complementary factors. Our findings describe that the complementary relationship exists between IT and non‐IT related investments. Thus, improved organizational productivity cannot be expected from investment in IT alone but only together with non‐IT investments. Our findings also point out that further investment may not necessarily bring on higher organizational productivity.