Information Technology Capital Research Articles

Firm digital investments and capacity utilisation: A perspective of factor inputs

Data resources empower traditional inputs and promote capacity utilisation. Previous research has proven the positive role of digitisation on capacity utilisation from the perspectives of information asymmetry and technological innovation, but there is still a lack of theoretical foundation. This study proposes a model of the impact of information and communications technology capital on capacity utilisation. We empirically test the relationship between firms' digital investments and capacity utilisation using the data of Chinese manufacturing-listed companies from 2007 to 2021. First, an inverted U-shaped feature exists between firm digital investments and capacity utilisation, and the main mechanisms are the ‘cost effect’, ‘capital allocation effect’ and ‘labour input effect’. Second, firms' bargaining power, industrial technology density and regional market development influence capacity utilisation when firms engage in digital investments. Third, narrowing the digital gaps within industries and regions and increasing investments in artificial intelligence, big data and digital technology applications can enhance the non-linear impact of firm digitisation on capacity utilisation. Fourth, digital transformation can resist the negative impact of external shocks on capacity utilisation to some extent. Our research provides theoretical and practical support to facilitate the high-quality development of firms.

Do hospital data breaches affect health information technology investment?

Objectives Data breaches are a financial and operational threat to hospitals. In this study, we examine the association between a data breach and information technology capital and labor investment. Methods In this retrospective cohort study, we used American Hospital Association data from 2017 to 2019 and an unbalanced panel of hospitals with 6751 unique hospital-year observations. The breached group had 482 hospital-years, and the control group had 6269 hospital-years. We estimated the association between data breaches, information technology capital, and labor investment using the average treatment effect with propensity-score matching. Results From 2017 to 2019, hospitals experienced more hacking and information technology incidents but fewer thefts and losses. We found that hospital data breaches were associated with a 66% increase in employed information technology staff and a 57% increase in outsourced information technology staff. Breaches were not associated with information technology operating expenses and information technology capital expenses. Conclusion Higher information technology labor investment due to the remediation of data breaches is an added cost to the healthcare system. Hospitals and policymakers should consider initiatives to improve cybersecurity and protect patient data.

Are environment-related technologies key to unlock the path towards sustainable development: An econometric analysis

The objective of this study is to investigate the correlation between energy intensity and environment-related technology in industrialized countries. By utilizing panel data from 23 countries over a span of 32 years (1990–2021), this research aims to contribute to the comprehension of the role of green innovation in sustainable development. The study employs the Stochastic Impacts by Regression on Population, Affluence, and Technology model while controlling for variables including population growth, gross domestic product in purchasing power parity, Information and Communication Technology capital deepening, renewable energy consumption, and green innovation represented by research and development expenditure on environment-related technology. The results of the analysis, employing panel unit root tests, cross-sectional dependence tests, and a Method of Moments quantile regression, reveal that green innovation has a positive influence on diminishing energy intensity, with a more substantial impact at higher quantiles. Moreover, ICT capital deepening is determined to have a positive and noteworthy effect on reducing energy intensity. The findings of this study offer valuable insights for policymakers in their endeavours to accomplish sustainable development goals.

Aging and labor share of income in Korea

AbstractA growing body of evidence points to a decline in the labor share of income. A sizable empirical literature delves into the relationship between technological progress, globalization, and market concentration and labor's declining income share, which can exacerbate income inequality. Population aging has often been put forth as a factor that worsens income inequality. However, few studies have empirically examined the nexus between aging and the labor share, a potentially significant driver of inequality. In this study, we use industry‐level data to investigate the nexus in Korea, a rapidly aging country where inequality has emerged as a big social and economic issue. We find a positive and significant association between aging and labor share. Hence, at least in Korea, we do not find that aging exacerbates income inequality by reducing labor's income share. In addition, our evidence suggests that labor share has a negative link with both information and communication technology capital and robots.

IT and Strategic Human Capital: Impact on Knowledge-Based Processes, Networks, and Outcomes

Advancements in information technology (IT) can have profound impacts on the development and management of human capital. Extant research has examined how human capital in markets and organizations are shaped by increased digitization and the deployment of strategies relying on collection and analysis of big data, cloud computing, social media, Internet of Things (IoT), and the like. In knowledge-intensive settings, however, IT-enabled mechanisms have heterogenous impacts on issues related to human capital. Although IT potentially expands capacity for collection, storage, and utilization of knowledge, some firms and individuals successfully leverage technology and information systems while others do not--or are even possibly left worse off. This symposium contributes to examining why such discrepancies may exist by shedding light on the market and organizational processes that underlie the intersection of IT and knowledge-based processes, networks, and outcomes as they relate to issues in strategic human capital. Can Social Media Alleviate Inequality? Evidence from Venture Capital Financing Presenter: Gavin Wang; Wharton OPIM Presenter: Lynn Wu; The Wharton School, U. of Pennsylvania Presenter: Lorin Hitt; U. of Pennsylvania Are Knowledge Sharing and Learning Tradeoffs? Linking Performance Incentives with KMS Usage Presenter: Sae-Seul Park; Carnegie Mellon U. - Tepper School of Business Cloud Adoption and Strategic Human Capital: Evidence from Norway Presenter: Derrick Choe; - Presenter: Amir Sasson; BI Norwegian Business School Presenter: Robert Channing Seamans; NYU Stern Hunting For Talent: Firm-Driven Labor Market Search in the United States Presenter: Ines Black; - Presenter: Sharique Hasan; Fuqua School of Business, Duke U.

Impact of information technology on firm performance: New evidence from Indian manufacturing

India has risen to prominence as a global supplier of information technology (IT). However, the extent to which IT benefits Indian manufacturing is less well known. We assess the effects of IT capital on firm's growth from 1998 to 2016. We make two significant contributions: (i) we make comparisons between different periods, high-IT intensive and low-IT intensive sectors and 14 manufacturing industries at a disaggregated-level, (ii) to overcome the problems of simultaneity in production function estimation, we employ a recently developed semi-parametric technique. Our findings indicate that (i) IT as a production input contributes significantly to firm's output, yet the estimated effects vary significantly by time-period and industry, (ii) the impact of IT is maximum between 2000 and 2009, and then begins to weaken between 2010 and 2016, (iii) IT elasticities in high- and low-technology sectors appear to be converging, particularly between 2010 and 2016.

The relationship between human capital, information technology capability, innovativeness and organizational performance: An integrated approach

The objective of the present study is to identify the existing relationships between the information technology (IT) human capital, IT capabilities, innovativeness, and organizational performance. A literature review indicated that there is space to be filled in the meeting of IT literature, human capital, and innovativeness, insofar as the particularities of these relationships are not clear and their joint role in the performance of organizations. A structural equation model was developed that analyzed the primary data provided by senior IT managers from 258 Brazilian public organizations. The results indicated that IT human capital is a unique construct and independent of IT capabilities, formed by the hard and soft skills of the IT staff, as well as their attitude towards technology. Human IT capital positively impacts the organizational IT capabilities, but it is not part of its composition since it is a corporate resource. The Human IT capital is of the necessary and fundamental inputs for IT capabilities, but it should not be confused with IT capabilities per se. We identified that IT human capital impacts IT capabilities, positively affecting organizational innovativeness. Finally, we identified that innovativeness is a driver for performance and leverages the effect of IT capabilities on performance.

Information technology and the labor market in China

In this paper, we examine the influence of investment of corporate capital, which we capture through heterogeneous company information technology utilization, on labor demand and labor income share. We find that increased investment in information technology by enterprises is associated with a general decrease in the proportion of labor income and the demand for labor. We also find that if the market power of enterprises in the industry is greater, the increase in investment of enterprise information technology capital is even less conducive to the willingness of enterprises to hire workers. Our results have implications for guidance towards corporate (information technology) investment decision-making.

The different effects of hardware and software on production interdependence in manufacturing

Make or buy decisions are often decisions between investing in capital for production or building supply chain relationships upstream. These are strategic decisions about production interdependence: the degree to which materials and services are provided internally versus purchased externally. Information technology (IT) has increased productivity with hardware and software such as robotics and flexible manufacturing systems. IT has also improved information sharing and coordination along the supply chain by integrating business processes with software. Within manufacturing, we examine whether hardware and software are related to choices of make versus buy differently. From a transaction cost perspective this can be due to differential impacts on reducing internal production costs versus external coordination costs. We find that in U.S. manufacturing industries from 1998 to 2016, hardware favors internal production suggesting hardware reduces costs of internal provision more; software increased purchases from upstream suppliers suggesting software reduces costs of external provision more. This result shows that hardware and software complementarity has limits in that each has distinct productivity targets, and that empirically the decision of make versus buy is manifested by investments in these different types of IT capital. That is, when facing strategic decisions about make versus buy in manufacturing, hardware and software have opposite impacts.

Investigating the effects of information technology investment on the performance of telecommunication companies

Information technology (IT) has a significant potential in improving the structure of organisations and the quality of companies' performance. However, the inconsistent relationships between IT investment and the performance of an organisation is the main issue which can result in failing of a successful implementation of IT. In this paper, an econometric model is developed to evaluate the possible effects of IT investment on the productivity of a telecommunication company. The results show a positive contribution of IT capital and labour investments on the company's productivity and financial performance indexes. Findings also approve that the current IT investment has a positive impact on the company's revenue generation even after deducting depreciation expenses. This effect is less than non-IT investments. According to statistical analysis, while there is a strong relation between total factor productivity of the company and its IT capital the relation between labour productivity and the IT capital is moderate.

A comprehensive framework of technology in marketing: Theory and applications

The goal of this paper is to conduct a detailed review of research on foreign market entry alliances mediated by information technology (IT). This paper offers the conceptual structure of cross- border IT interactions and performance effects that is technically aware. It combines resource-based view (RBV) viewpoints and transaction cost economics (TCE), arguing that developing IT interface capabilities improves the commercial efficiency by enhancing interfirm relationship governance in the host location of the foreign partner. More relevant modulators are often known as IT-related threats and contextual limitations. It proposes concepts of IT capabilities, enhanced IT interfirm governance and improved IT marketing efficiency. Building from RBV and TCE, IT capital, relevant human resources, and IT integration, the capacity of companies to better manage the connection through joint control, interfirm collaboration, organizational formalization and hybrid centralisation is improved by the combination of RBV and TCE. These advantages contribute to increased marketing efficiency at the host place upstream and downstream. IT capabilities also lead to mitigating potential contextual constraints and threats. The paper presents a range of research ideas based on theory and literature that will be empirically evaluated in future studies. Top managers of companies currently or intend to enter into foreign market entry partnerships should consider carefully improving inter-company IT capabilities with regard to hardware and software preparation, human resources and organizational assets.

A comprehensive framework of technology in marketing: Theory and applications

The goal of this paper is to conduct a detailed review of research on foreign market entry alliances mediated by information technology (IT). This paper offers the conceptual structure of cross- border IT interactions and performance effects that is technically aware. It combines resource-based view (RBV) viewpoints and transaction cost economics (TCE), arguing that developing IT interface capabilities improves the commercial efficiency by enhancing interfirm relationship governance in the host location of the foreign partner. More relevant modulators are often known as IT-related threats and contextual limitations. It proposes concepts of IT capabilities, enhanced IT interfirm governance and improved IT marketing efficiency. Building from RBV and TCE, IT capital, relevant human resources, and IT integration, the capacity of companies to better manage the connection through joint control, interfirm collaboration, organizational formalization and hybrid centralisation is improved by the combination of RBV and TCE. These advantages contribute to increased marketing efficiency at the host place upstream and downstream. IT capabilities also lead to mitigating potential contextual constraints and threats. The paper presents a range of research ideas based on theory and literature that will be empirically evaluated in future studies. Top managers of companies currently or intend to enter into foreign market entry partnerships should consider carefully improving inter-company IT capabilities with regard to hardware and software preparation, human resources and organizational assets.

Impacts of Endogenous Sunk-Cost Investment on the Islamic Banking Industry: A Historical Analysis

Endogenous sunk-cost investments are optional fixed investment or capita, that a firm can choose to impact either upon its price-cost margin or its market share for capturing larger market spoils. Oft-cited examples are investments in vertical product (quality) differentiation, advertising outlays, and R&D type expenses for improving production processes. The importance of sunk-cost capital has been highlighted in the recent literature since these investments significantly influence the degree of competition in an industry mainly through forestalling entry and thereby limiting future competition in the industry. Sunk-cost investments play an important role in the debate on the competition-(in)stability perspectives for the banking industry. This paper is motivated by an important distinction, hitherto unrecognized, that some endogenous sunk-cost investments impact on the relative efficiencies of firms and thereby on its market spoils or profits, while others will only impact on its market share and thereby on profits. An example of this distinction is as follows: while quality improvement in a product or production processes will create efficiencies and, therefore, additional profits, while advertising expenses are used to snatch market shares from rivals. The unintended consequence of the first type of endogenous-sunk cost investment is to boost efficiencies and thereby shape the nature of competition in a market. The second type will have little effect on efficiencies. In this paper, by exploiting the above distinction and using a dataset created from the annual reports of nine major Islamic banks in Jordon during 1993–2010, we will apply the efficiency models and the autoregressive distributed lag (ARDL) methodology to test if information technology (IT) capital is strategically used by Islamic banks as an endogenous sunk-cost investment to boost their relative efficiencies. For the first time—to the best of our knowledge—we find that IT capital is strategically used by seven out of the nine Islamic banks. We then consider the implication of the strategic use of IT capital by Islamic banks for the nature of competition in the Islamic bank industry of Jordon. By so doing, we also argue that IT capital, through its effects on the nature of competition, will lend stability to the Islamic banking industry of Jordan.

The Strategic Value of Information Technology in Setting Productive Capacity

Capacity is the maximum short-run output with capital in place under normal operations, and capital investment increases capacity. Excess capacity can be used as entry deterrence by lowering average costs over a greater range of output, and as an operations strategy by providing value through flexibility to manage demand fluctuations and production disturbances. We study the way that information technology (IT) can contribute to a strategy of holding excess capacity by comparing the relationship between IT capital and capacity with that of non-IT capital and capacity. We find that increases in IT capital yield almost fourfold greater expansion in capacity than do increases in non-IT capital. Thus, as both types of capital are constraints on capacity, for a strategy of holding excess capacity, IT capital is a more valuable constraint to relax than non-IT capital. In addition, since the late 1990s, IT capital and, to a lesser extent, non-IT capital have reduced capacity utilization (output divided by capacity), meaning increasing levels of excess capacity are being held across manufacturing industries and utilities across the economy.

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.

How Does Information and Communication Technology Capital Affect Productivity in the Energy Sector? New Evidence from 14 Countries, Considering the Transition to Renewable Energy Systems

By focusing on a distributed energy system that has been widely diffused for efficient utilization of renewable energy generation in recent years, this paper investigates the relationship between productivity growth and information and communications technology capital in the energy sector. Information and communications technology is a key factor in operating distributed energy systems in a way that balances energy supply and demand in order to minimize energy loss and to enhance capacity utilization. The objective of this study is to clarify the determining factors that affect productivity growth, focusing on three different information and communications technologies: information technology capital, communication technology capital and software capital. Our estimation sample covers energy sectors in 14 countries from 2000 to 2014. The results show that information technology and software capital contribute to increasing material productivity and capital productivity in the energy sector, respectively. Meanwhile, communication technology capital negatively affects these two productivity indicators.

Evaluation of the Impact of Information Technology Capital and Intellectual Capital on Future Returns of Companies in the Capital Market

This study evaluates the relationship between information technology capital, organisational capital, relational capital and innovation capital and the company's future returns on capital markets. The research method is applied and the used statistical method is regression model of ordinary least squares (OLS). The statistical sample included 50 companies operating in the capital market from 2009 to 2013. The results of the research hypothesis test indicate that with increasing the level of information technology capital and intellectual capital subsets, including organisational capital, relational capital and innovation capital, future returns of the companies also increase. The results of the research also showed that information technology capital played the most important role in the future returns of the companies, and among the subsets of the intellectual capital, the relational capital had the greater impact on future returns.

Evaluation of the impact of information technology capital and intellectual capital on future returns of companies in the capital market

This study evaluates the relationship between information technology capital, organisational capital, relational capital and innovation capital and the company's future returns on capital markets. The research method is applied and the used statistical method is regression model of ordinary least squares (OLS). The statistical sample included 50 companies operating in the capital market from 2009 to 2013. The results of the research hypothesis test indicate that with increasing the level of information technology capital and intellectual capital subsets, including organisational capital, relational capital and innovation capital, future returns of the companies also increase. The results of the research also showed that information technology capital played the most important role in the future returns of the companies, and among the subsets of the intellectual capital, the relational capital had the greater impact on future returns.

Information Technology Value Engineering Model and Cost Efficiency in IT-Based Firms

This paper aims to explore the improved business performance established on optimum costs. This structure rests on a proposed information technology (IT) value engineering model, which is an engineering process associated with IT inclusion in a business organization. Therefore, the methodology approach utilizes systems engineering to develop an engineering scheme procedure by stating the problem, creating alternate resolutions, deciding a resolution, specifying the scheme, and confirming the model. Additionally, this methodology works in cooperation with the resource-based view (RBV) and the partial adjustment valuation (PAV) theories. The RBV recommends that a firm worthy performance can rely on its own resources, whereas PAV reconstructs the input–output relationship of the system. The input consists of K = the regular capital, L = the labor expense, and I = the IT capital, whereas the output is y as the real output of a production process unit. Furthermore, three Indonesian Telco's firms (Telkom, Indosat, and XL) provided the model with data to experiment it. Furthermore, the results disclose the IT value engineering model has worked, and where the model has provided the firms with the improved performance at lower costs. In other words, this model has been effective numerically as well as logically.

Broad-based intangibles as generators of growth in Europe

ABSTRACTThis paper analyzes broad performance-based measures of intangibles in European Union countries to find new sources of growth and shows that intangible capital (IC)-driven growth was halted in European industries during the 2008–2013 financial crisis period. Much of this IC, such as purchased organizational, research and development (R&D) and information and communication technology capital, is unaccounted for in systems of national accounts, so that total IC investment is 29.6% of value added, with R&D having the lowest gross domestic product share at 5.0%. On average, deteriorating IC growth has decreased labor productivity by −2.9% annually. Policies fostering multifactor productivity growth have been strongly biased and have ignored the loss of those skills necessary for long-term growth. During 2008–2013, innovation thus failed to compensate for Europe’s dwindling fixed-capital-intensive manufacturing and job losses, but broad-based IC offers a roadmap for recovery by relying on an increasing role for IC-producing services.