IT spending in the midst of the Asian economic downturn: a Singapore perspective

The Asian economic downturn has severely affected the revenue and profitability of companies operating in Asia. This has in turn caused a significant number of companies to reduce their spending on IT, particularly in the countries that have been most affected by the downturn. While IT spending is an immediate and visible effect of the downturn, less visible changes in managerial attitudes towards IT, and approaches to controlling IT spending are likely to have longer term implications to the IT capabilities of companies in the region. In this paper, we examine these issues in the Singapore context, paying particular attention to how companies plan to control and reduce IT infrastructure spending. We found that in the participating firms, managers appear to pay more attention to the links between business strategy and IT after the downturn. We also found that deferring investments in physical infrastructure and outsourcing were the main approaches to IT cost reduction.     

The impact of information technology on financial performance: the importance of strategic choice

Information technology (IT) may not automatically improve firm profitability. It is an essential tool, but not sufficient in itself, and should therefore be coupled with organisational factors such as business strategies. A firm can maximise the value from its IT investments by aligning them with business strategies because IT improves scope economies and coordination. This paper examines empirically the contribution of IT to financial performance as measured by net profit, ROA, and ROE by focusing on the alignment of IT with business strategies such as vertical disintegration and diversification. Empirical analysis shows that IT does not directly improve financial performance. In conjunction with vertical disintegration and diversification, however, it does improve financial performance as measured by net profit. Financial performance ratios such as ROA and ROE, however, are not correlated with the alignment (or interaction) factor of IT with vertical disintegration and diversification. The results indicate that increased IT spending improves net profit, but not performance ratios such as ROA and ROE, of firms with decreased vertical integration and higher diversification.     

Forecasting classification of operating performance of enterprises by ZSCORE combining ANFIS and genetic algorithm

Classification of operating performance of the enterprises is not only a hot issue emphasized by the management, but it is an important reference for investors too in their decision-making. Generally speaking, when predicting or analyzing business performance classification, most researchers adopt corporate financial early warning or credit-rating models, which pretty much use previous data and facts. Therefore, this paper brings about an alternative method to discriminate between excellent and poor business management, so as to take preventive measures prior to business crisis or bankruptcy. We collected the financial reports and financial ratios from the listed firms in mainland China and Taiwan as our samples to build up four kinds of forecasting models for business performance. The empirical results show that the hybrid model provides better classification forecasting capability than the other models, while the ANFIS model adjusted by genetic algorithm could effectively enhance the classification forecasting capability.     

The impact of information technology on the financial performance of diversified firms

Diversification may increase economic benefits through more efficient utilization of business resources across multiple markets. However, the benefits of these scope economies are often not realized due to costs of coordinating resources in multiple markets. Information technology (IT) is widely used to achieve more efficient coordination by reducing the costs of coordinating business resources across multiple markets. Because of the need for coordination of business resources across multiple markets, diversification can increase the demand for IT. But does increased use of IT improve the performance of diversified firms? This research tackles this question by undertaking an empirical study of the impact of IT on the financial performance resulting from diversification by focusing on the strategic direction chosen by different firms. The empirical aspects of this subject have received little attention from previous information systems (IS) and economics research. This research also sheds light on the business value of IT by showing the importance of complementarity between IT and strategy in firm performance, a subject which has also received limited attention in prior IS research.     

Drivers and export performance impacts of IT capability in ‘born‐global’ firms: a cross‐national study

Past research focusing on large firms has argued that information technology (IT) capability enhances firm performance. However, these studies have seldom explored why firms develop IT capability, and have also left a void the understanding of the role of IT capability in Small‐ and medium‐sized enterprises (SMEs). This study attempts to fill that void by examining the effect of relevant environmental and firm‐level factors on IT capability, and the effect of IT capability on the export performance of Chinese and US born‐global firms, a special breed of export‐focused SMEs. Results indicate that environmental factors such as information intensity, and firm‐level factors such as international entrepreneurial orientation, prompt born‐global firms to develop IT capability. Further, our results also strongly emphasise the positive role that IT capability plays on the performance of born‐global firms. Finally, a comparative analysis of the Chinese and US born‐global firms revealed a lack of a cross‐cultural difference in the factors leading these firms to develop IT capability, therefore supporting the ‘convergence’ perspective in cross‐cultural research.     

The dual role of IT capabilities in the development of digital products and services

Past research on the business value of information technologies (IT) has demonstrated the positive contribution of IT capabilities (IT-C) to product innovation performance. However, with the advent of digital technologies, a new kind of product innovations gained importance: digital product and service innovations (DPI). As a consequence of their idiosyncratic characteristics, the usefulness and validity of existing product innovation management concepts cannot be transferred to the context of DPI without further ado. Accordingly, this study reinvestigates the role of IT-C in the specific context of DPI. Therefore, we begin with a differentiation of DPI from traditional, non-digital product innovation. Then, we propose that IT-C affect the performance of DPI projects via two paths. First, based on the notion that DPI rely on the use of innovative IT, we assume that IT-C directly impact DPI performance. Second, following prior research that has argued that the performance contribution of IT-C is mediated by other organizational intermediaries, we assume that IT-C also indirectly contribute to DPI performance through their positive influence on other organizational capabilities. One such organizational capability that mediates the influence of IT-C on DPI performance is a firm’s DPI capabilities (DPI-C). DPI-C allow firms to deploy their digital resources for DPI purposes and, thus, are an important antecedent for DPI performance. To test our assumptions, we use partial least squares–structural equation modeling technique and analyze survey data collected from DPI projects across different industries in Germany, Austria, and Switzerland.     

Effects of information technology failures on the market value of firms

IT failures abound but little is known about the financial impact that these failures have on a firm’s market value. Using the resource-based view of the firm and event study methodology, this study analyzes how firms are penalized by the market when they experience unforeseen operating or implementation-related IT failures. Our sample consists of 213 newspaper reports of IT failures by publicly traded firms, which occurred during a 10-year period. The findings show that IT failures result in a 2% average cumulative abnormal drop in stock prices over a 2-day event window. The results also reveal that the market responds more negatively to implementation failures affecting new systems than to operating failures involving current systems. Further, the study demonstrates that more severe IT failures result in a greater decline in firm value and that firms with a history of IT failures suffer a greater negative impact. The implications of these findings for research and practice are discussed.     

Resolving paradoxes in IT success through IT ambidexterity: The moderating role of uncertain environments

As information technology (IT) success is both essential and elusive, researchers and practitioners are faced with an ongoing challenge to determine what IT capabilities should be developed to ensure IT success. Drawing on the paradox and ambidexterity theory, we highlight paradoxes in IT success and propose that firms manage these paradoxes by developing an IT ambidexterity capability. We hypothesize that IT ambidexterity capability enhances IT success, and that uncertain environments strengthen this relationship. Our hypotheses find support in a sample of 292 British high-tech firms. This research contributes to conceptualize paradoxes in IT success and advances the theory for a more comprehensive understanding of the impacts of IT ambidexterity capability.     

Evaluating organizational efficiency resulting from information technology investment: an application of data envelopment analysis

Abstract. Even during this recessionary era, information technology (IT) expenditure in most organizations continues to grow at a high rate. Because of this increased IT expenditure, more and more senior managers are demanding that IT play a greater role in determining their firm's success by helping them increase organizational efficiencies and perhaps even achieve competitive advantage. The existing information systems literature on IT investment and organizational strategic performance, however, provides very little help to senior managers in making before-the-fact IT investment decisions. The present research study puts forth some 'hard' evidence relating IT investment to organizational strategic and economic performance by using data envelopment analysis (DEA). Eight IT investment measures were used as inputs and 10 organizational strategic and economic performance ratios were used as outputs for the DEA model. The results indicate that two-thirds of the organizations in this research study are deemed efficient by DEA. A clear distinction exists between the efficient group and the inefficient group in terms of IT investment and organizational strategic and economic performance. The firms in the efficient group had a much higher return on their information technology investment than the inefficient group. In addition, the DEA results pinpoint the inefficient inputs and deficient outputs for an inefficient firm allowing a senior manager to take corrective actions to compensate for the situation.     

Associating organizational strategic performance with information technology investment: an exploratory research

In the last twenty years, firms have witnessed an explosive growth in information technology (IT) investment. This is true both for manufacturing industries and service industries. The existing literature on IT investment and organizational strategic performance, however, provides very little evidence linking IT investment to organizational strategic and economic performance. The present research investigates whether certain IT investment measures are useful in differentiating organizational economic performance among the most effective information technology users. Eight measures were used to represent IT investment. Ten ratios were utilised to measure organizational strategic and economic performance. The sample organizations were analysed using multidimensional cluster analysis. The results of the analysis suggest that a clear distinction exists between organizations in terms of IT investment and organizational strategic and economic performance. This is true even among the most effective users of information technology. The results also suggest that the majority of the organizations that are investing more in IT seem to be achieving superior strategic and economic performance.     

机会在“潜伏”——经济复苏为自动识别技术带来的机会

当前中国总体经济形势回升向好,但必须清醒地认识到,这种回升向好的态势还不够稳定,全面复苏将是一个缓慢曲折的过程。可就是这样一个缓慢曲折的过程,其中"潜伏"了很多帮助自动识别技术发展的机会。     

Business analytics and business value: A comparative case study

With growing adoption of business analytics, it is important for investing firms to understand how business value is created from investments. Studies in IT domain have highlighted how higher investment in technology may not bring more returns, rather how IT as an organizational capability acts as a key mediator in value creation. This research extends the model to business analytics, to identify elements of analytics technology assets and business analytics capability and to understand the mechanism of business value creation using multiple case studies. We capture how analytics resources contribute to business performance by developing operational and organizational performance measures.     

Modeling the business value of information technology

Modeling and measurement issues have been considered the heart of information technology (IT) productivity paradox problem. By collecting data from seven mortgage firms, this research attempts to shed light on the causal relationships and complementarity properties among IT and performance variables. The result is a multi-level business value model that connects the use of IT to a firm’s profit. It is concluded that although there exists a causal relationship between IT and profit, this relationship is indirect and complex. Due to the complementary nature of the relationships, such a complexity is not reducible. All complementary factors must be in favorable conditions for a positive return of IT investments.     

Information technology and productivity: Empirical evidence from the Chinese electronics industry

The importance of IT has been increasing in both developing and developed countries over the past three decades. However, almost all findings on IT productivity have been based on data collected in developed countries, while research on productivity in developing countries has been sparse. We studied the effect of IT investment on firm-level productivity in the Chinese electronics industry using a production function model. We found that the direction and size of the impact of IT investment on productivity in China were generally similar to results of studies for the United States and concluded that Chinese firms should invest more in IT. Finally, contrary to popular belief, labor is still an important factor in the production function of the Chinese electronics industry, despite its status as a high-technology industry.     

IT capabilities and firm performance: A contingency analysis of the role of industry and IT capability type

Previous empirical studies examining the relationship between IT capability and accounting-based measures of firm performance reported mixed results. We argued that prior work has relied on aggregate overall measures of the firm's IT capability, ignoring the specific type and nature of IT capability; and also has not fully considered important environmental conditions that influence the relationship. Drawing on a resource-based view, we advanced a contingency perspective and proposed that IT capabilities’ impact on firm resources was contingent on the “fit” between the type of IT capability/resource a firm possesses and the demands of the industry in which it competes. Specifically, using publicly available rankings as proxies for two types of IT capabilities (internally and externally focused), we empirically examined the degree to which three industry characteristics (dynamism, munificence, and complexity) influenced the impact of each type of IT capability on measures of financial performance. After controlling for prior performance, we found there was general support for the posited contingency model. The implications of these findings are also discussed.     

Unpacking the effect of IT capability on the performance of export-focused SMEs: a report from China

Abstract.  Export-focused small and medium-sized enterprises (SMEs) in China face a number of barriers to success, two primary ones being the liability of foreignness and resource scarcity. In order to transcend these challenges and be able to survive/prosper in the hypercompetitive international market, where players include large resourceful multinational organizations with experience in varied national contexts, these firms need to develop different organizational capabilities. In this paper, we specifically examine the role of a key organizational capability – information technology (IT) capability – and its different dimensions, in determining performance of export-focused SMEs in China. Our study reveals that IT capability has a positive impact on such firms' performance. This finding indicates the need for their owners/managers to invest in IT capability. Further, the study also highlights specific sub-dimensions of IT capability that export-focused Chinese SMEs should (or should not) develop, so as to derive maximum performance-related gains for the minimum amount spent on IT.     

Balancing exploration and exploitation of IT resources: the influence of Digital Business Intensity on perceived organizational performance

Facing a barrage of novel information technology (IT), organizations must invest on the basis of the impact of IT capabilities on the organization’s performance. This research extends Bharadwaj’s (MIS Quarterly 169–196, 2000) resource-based view of the relationship between IT capability and performance by introducing both the mediating and moderating effects of Digital Business Intensity (DBI). Empirical data collected from CIO’s from US firms reveal that although IT capability positively influences organizational performance, this relationship may differ in strength at different levels of DBI. Our study also finds that IT capability is important in determining DBI, which in turn influences organizational performance. Findings highlight tensions between DBI exploration and IT capabilities exploitation. Results also suggest that companies that leverage their existing IT capabilities to drive DBI are more adept at securing performance returns. However, when DBI investments do not complement existing IT capabilities, DBI appears to dampen performance, further accentuated for high-DBI firms.     

A survey of business process reengineering practices in Singapore

The changing economic environment has led to an increasing interest in improving organizational processes to enhance business performance. This paper presents the results of a survey of the business process reengineering (BPR) practices followed by firms in Singapore. The paper highlights the status of BPR projects, motives behind their efforts, the functional areas targeted for reengineering, roles of various organizational members in BPR programs, use of IT in BPR, and the main problems faced in the efforts of Singapore firms. The results show that about 50% of firms surveyed were engaged in BPR projects, with as many as 37% of the firms indicating their intention to take up BPR projects in the next few years. Main problems faced by the Singapore firms are the lack of human and financial resources, lack of internal IT expertise and capabilities, and lack of a champion for BPR efforts. These findings are compared to prior studies in the US and elsewhere. The paper concludes with a discussion of the implications based on the findings of the survey.     

Impact of digital leadership capability on innovation performance: The role of platform digitization capability

Following a mixed-methods approach, we theorized that digital leadership influences innovation performance by digitalizing the firm's platform. A multiple case study of ten companies was deployed to derive a theoretical model relating digital leadership and innovation performance. The resulting model was empirically tested on a sample of 117 European firms. We find that digital leadership improves a firm's innovation performance by digitalizing the firm's platform. We contribute to IS research by theoretically developing the concepts of digital leadership capability and platform digitization capability and empirically analyzing the relationship of these two critical IT capabilities and their impact on innovation performance.     

Priorities,policies and practice of e-government in a developing country context: ICT infrastructure and diffusion in Jamaica

This paper presents the findings of recent research into e-government policies and initiatives undertaken by the Government of Jamaica within the context of selective intervention facilitated through financial and technical assistance. In the specific context of a developing economy it highlights the use of infrastructure building and government intervention to aid diffusion of information and communication technology (ICT) and draws attention to the differences between developed and developing countries in their approach to e-government. A case of the Jamaica Customs Department is provided to exemplify the implementation of e-government in practice. Using institutional factor analysis for IT innovation the interaction of policy and practice is analysed. Four significant themes are identified that characterise the context for e-government policy, together with the associated institutional factors. The relative importance of these factors is demonstrated with Innovation Directive, Standards and Subsidy shown to be prime. These findings contribute to both institutional factor analysis for IT innovation and to ICT adoption theory, and together signal the importance of the inclusion of policy-based intervention in a future research agenda for e-government in a developing country context.