Hierarchical business value of information technology: Toward a digital innovation value chain

Information technology (IT) increasingly changes the ways through which firms develop and commercialize innovation. Prior studies have mainly focused on the direct effect of IT use on innovation performance, while little is known about how IT use for different purposes in the innovation processes leads to innovation performance at the organizational level. Drawing on the routine-based absorptive capacity (AC) framework, we conceptualize IT use for knowledge search and relational search as IT-enabled internal and external AC routines and unveil the hierarchical benefits resulting from IT use for innovation. We propose a model in which firms need to purposefully use IT to search for knowledge in the new product development process or search for relationships in the collaborative innovation process, leading to first-order benefits (i.e., internal innovation benefits and open innovation benefits) and, in turn, second-order benefits (i.e., innovation performance). By using a unique data set from 1028 German firms between 2003 and 2007, we find that IT use for knowledge search enhances internal innovation benefits, whereas IT use for relational search increases open innovation benefits. More importantly, internal and open innovation benefits mediate the relationships between IT use for knowledge and relational search and various innovation performance measures. Taken together, our findings shed light on a deeper understanding of the digital innovation value chain.     

Information technology investments and firm value

Our objective in this paper is to develop a firm value model to assist IT managers and researchers in understanding the multiple effects that IT investments have on firm value. This firm value approach adds to the process-oriented approach through simultaneous evaluation of all of the factors that affect firm value. It is crucial for IT professionals to recognize the complex and diverse implications of IT investments on firm value. The implications of the firm value approach include forcing IT managers to think in terms of both industry and company-specific effects of IT investments, to consider both the magnitude and duration of competitive advantage due to IT investments, and the implications of the effect that IT investments have on risk and its relation to firm value. We demonstrate an application of the firm value framework by evaluating a major stream of research in MIS—event studies of IT investment announcements. Appendices to this paper can be found at http://www.itandfirmvalue.com.     

Differential innovation of smartphone and application use by sociodemographics and personality

In the current study, we explore predictors of smartphone and smartphone application use in a large, diverse, population representative South Korean sample (N = 9482). Sociodemographics (e.g., gender, age, education, and income) were major predictors of smartphone and smartphone application use. Generally, younger, educated, and wealthy individuals tended to use smartphones and smartphone applications to a greater extent. Females tended to use smartphones, e-commerce applications, and relational applications more compared to males. Openness, extraversion, and conscientiousness were associated with increased probability of smartphone ownership. Extraversion was associated with decreased literacy application use and increased relational application use. Conscientiousness was associated with decreased e-commerce application use. These results imply that sociodemographics and personality predict smartphone innovation.     

A structural equation model for analyzing the impact of ERP on SCM

Enterprise resource planning (ERP) and supply chain management (SCM) represent important information technology investment options for operation or IT managers, and have been acclaimed in the practitioner and academic literature for their potential to improve business performance. The purpose of this article is to provide further insights into the adoption of ERP systems and the impacts on firm competence in SCM. We propose a model featuring ERP benefits to firm competences in supply chain management. We also hypothesize that three constructs of ERP benefits positively impact firm competences in SCM. To clarify the relationships among these constructs, structural equation model (SEM) is conducted to examine the model fit and nine hypotheses. The SEM results clearly demonstrate that there exist close interrelations among the benefits of implementing ERP systems and firm competences in SCM. The data from Taiwanese IT firms was collected through interviewing of experts and surveys. The results provide empirical evidence that the beneficial impacts of ERP on the supply chain do lead to better overall SCM competence. That evidence confirms that operational benefits, business process and management benefits, and strategic IT planning benefits of ERP in turn enhance firm competences of SCM in operational process integration, customer and relationship integration, and planning and control process integration.     

The transformational dimension in the realization of business value from information technology

Econometric studies have highlighted factors that appear to explain the differential effects of information technology (IT) on productivity at the firm level. Central to these explanations is the concept of organizational transformation; that value realization from IT depends on time-consuming investments in organizational change and results in new, often intangible, organizational assets. The aim of this study was to further investigate the concept of IT-enabled organizational transformation as a component of the value realized from IT at the firm level. Survey data was analyzed from respondents from 1050 businesses of varying sizes and across industries. Transformational benefits were found to exist as a distinct benefit category and to be closely related to other forms of IT-generated business benefits. They were also an important component of overall IT business value. Qualitative data illustrated these findings and pointed to possible complex causal relationships in the generation of IT value. The findings have implications for models of IT business value generation and for managerial practice.     

How does customer self-construal moderate CRM value creation chain?

Most of the existing literature on CRM value chain creation has focused on the effect of customer satisfaction and customer loyalty on customer profitability. In contrast, little has been studied about the CRM value creation chain at individual customer level and the role of self-construal (i.e., independent self-construal and interdependent self-construal) in such a chain. This research aims to construct the chain from customer value to organization value (i.e., customer satisfaction → customer loyalty → patronage behavior) and investigate the moderating effect of self-construal. To test the hypotheses suggested by our conceptual framework, we collected 846 data points from China in the context of mobile data services. The results show that customer’s self-construal can moderate the relationship chain from customer satisfaction to customer loyalty to relationship maintenance and development. This implies firms should tailor their customer strategies based on different self-construal features.     

Planning and Executing IT Strategy

Planning leads to effective execution of any activity, whether it's IT or any business function. Planning ensures that technology efforts are business driven, aligned with business strategies, and coordinated across the company as opposed to being done in silos (each business unit acting in a compartmentalized manner). Planning can save money by taking advantage of corporate policies and standards across the enterprise. It can also eliminate the duplication of efforts by using shared services, implementing architectural principles, and using single research groups within a firm. Further benefits of planning include directing investments in technology and people toward improving the bottom line, serving customers better, and outperforming the competition. Planning and executing IT programs requires understanding how IT functions. In this article the author show i) how leaders can align IT within the business environment ii) how easy it is to understand technology operations within a business environment, and iii) how to capitalize on the use of technology through effective planning.     

The use of computer-based information systems by German managers to support decision making

We surveyed German managers to investigate their use of information technology (IT), including their perception of the value provided by computer-based information systems (CBIS) and their satisfaction with CBIS in supporting decisions. Participants were predominantly male, the majority were older than 45, most had taken two or more college computer courses, and over 90% were middle and top-level managers. They represented a variety of functional areas. Results show that these managers were relatively heavy IT users, with over 10 h of use per week. Overall, there was a significant correlation between the amount of use of IT and perceived value of the CBIS, as well as between satisfaction with and perceived value of the CBIS. Hypothesis tests for task-technology fit (TTF) showed that the greatest TTF was related to resource allocation, evaluating alternatives, identifying problems, and making short-term decisions. For middle and top managers, information reporting systems (IRS), which provide regularly scheduled reports, had greater TTF than more flexible inquiry and analysis systems, such as decision support systems (DSS).     

Information Technology Investments: Characteristics, Choices, Market Risk and Value

The decisions confronting information technology (IT) managers have changed a great deal since the early 1970s. The key decisions three decades ago were related to the management of application development projects and operations centers. Today, the key decisions are quite different. What level of service should the firm provide end-users? Should IT services, development projects and the ownership and management of operations centers be outsourced? IT investments attempt to satisfy specific needs. Because of environmental differences and differences in the cost structure and benefits of alternative ways in which these needs can be met, the answers to these questions may differ across firms. Modern financial analysis can provide insights to help managers deal with many of the problems they currently face. We use modern financial theory to show how the value of IT investments can be affected by some of the choices made by managers. We show how the market risk of demand and the market risk of costs affect the market risk and value of IT investments. We consider three types of investment decisions: outsourcing versus in-house services; investments in interorganizational systems; and determining the optimal level of IT services that should be provided. Our analysis indicates that: (1) as the market risk of demand for operations decreases, firms are less likely to outsource operations; (2) the value of an investment in an interorganizational system increases as the market risk of costs increases; and (3) the optimal level of user service is inversely related to service demand risk and is directly related to the market risk of service costs.     

Students’ perceptions of creativity in learning Information Technology (IT) in project groups

This paper explores students’ perceptions of creativity in learning Information Technology (IT) in project groups and the implications of better educating creative IT students for the future. Theoretically, the extension of social psychology research into creativity lays the basis of bringing creativity, learning and IT education into one framework. Empirically, qualitative interviews were carried out with 48 students from three disciplines, including Computer Science (n = 16), Electronic Systems (n = 15) and Medialogy (n = 17) at Aalborg University (AAU) in Denmark, which has a tradition of using problem-based learning (PBL) in student project groups. According to the findings, the students’ perceptions of creativity reflect their domain-related conceptualization and tacit learning experience, with different levels of confidence of being creative persons. As IT plays multiple roles in developing students’ creativity, it can be regarded as a ‘learning partner’. This implies that in the future creativity should be taught more explicitly, helping students to become creative IT talents as a part of their professional identity. It also requires teaching efforts to build a learning environment that stimulates creativity more effectively through more interactions between learners, learning tasks and learning tools.     

Organizational form, incentives and the management of information technology: Opening the black box of outsourcing

In this work, we attempt to show how operations researchers can effectively manage the production costs of computing services. The thesis of this paper is that an outsourcing firm, by virtue of the fact that it manages the IT function for multiple firms, is privileged to information not available to the focal firm. We derive the conditions under which this privileged information allows the partner firm to construct superior incentives for its employees, resulting in superior IT management. Further, we detail the circumstances under which outsourcing will not provide additional benefit, and what sorts of partners are likely to provide the greatest benefit. The two main findings are that for low levels of uncertainty, both in-house and relational management are equally acceptable. However, as uncertainty increases, the value of relational management increases. Conclusions are drawn and extensions are proposed, related to economies of scale and transactions costs.     

The enigma of evaluation: benefits,costs and risks of IT in Australian small–medium-sized enterprises

The evaluation of information technology (IT) is fraught with misconception and there is a lack of understanding of appropriate IT evaluation methods and techniques. The benefits, costs and risks of IT need to be identified, managed, and controlled if businesses are to derive value from their investments. This paper presents findings from an exploratory study that used a questionnaire survey to determine the benefits, costs and risks of IT investments from 130 small-to-medium-sized enterprises (SMEs) in Australia. The analysis revealed that organizations from different industry sectors significantly differ in the amount they invest in IT but that firm size (in terms of turnover and number of employees) does not influence IT investment levels. Second, strategic benefits vary across different industry sectors. Third, the way employees adapt to change as a result of IT implementation depends on the size of the organization. Based upon the findings, a series of benchmark metrics for benefits, costs, and risks of IT are presented. It is posited that these can serve as a reference point for initiating a quality evaluation cycle in which benchmarking forms an integral component of the strategic process.     

Toward more effective management of information technology benefits

A critical issue facing senior executives is how to improve the return on their information technology (IT) investments. The results of numerous studies are inconclusive as they have failed to show conclusively that IT investments produce expected payoffs. The purpose of this paper is to offer an explanation for the perceived lack of IT payoff and show how managers can improve the return on their IT investments. We argue that IT can provide significant benefits, but in many cases these benefits are not captured by the firm that made the investment. Instead, a large portion of the benefits are reaped by a variety of participants or stakeholders. The implications of this for managers is that they need to view IT payoff as a portfolio of benefits across many stakeholders. They must also understand and manage the distribution of the benefits within the portfolio to assure that benefits are transferred to the bottom line. The paper offers a framework for analyzing the nature and distribution of IT benefits among various stakeholder groups and concludes with a set of guidelines for measuring and managing these benefits.     

Information security breaches and IT security investments: Impacts on competitors

In current business climate, a firm’s information systems security is no longer independent from the industry’s broader security environment. A question arises, then, whether stock market values reflect the interdependence of security breaches and investments. In this paper, we used the event study methodology to investigate how a firm’s security breaches and IT security investments influence its competitors. We collected and reviewed 118 information security breaches and 98 IT security investment announcements from 2010 to 2017. We found substantial evidence supporting our hypothesis that information security breaches do, indeed, have a competition effect: when one firm is breached, its competitors have opportunities to absorb market power. For the IT security investment announcements, however, we observed the positive externalities, or contagion effect, in play: market investors feel that the security investments made by one firm increase the security level of the entire network, and hence, competitors also get benefits. Additionally, we found that the competition effect was higher when the breaches occurred after the preceding security investments than when there were no preceding investments before the breaches.     

Do you see what I see? The search for consensus among executives’ perceptions of IT business value

Since firms rarely collect data on the precise economic or financial impacts of information technology (IT), perceptions play a key role in assessing IT impacts. To the extent that executives in the same firm evaluate IT impacts similarly, it can be easier to approve future IT investments or to initiate corrective action for failing IT investments. In this study, we use distributed sensemaking theory to investigate the conditions under which executives will reach a consensus as to the extent and locus of firm and process-level IT impacts in their firm. Using data from surveys of 133 top-level business executives in 13 firms, we show that consensus is a function of CIO-led sensegiving in the form of IT promotion, CIO leadership, information systems (IS) engagement with end users, and IS-business communications. The absence of consensus – discord – suggests IS disengagement, a lack of effective CIO leadership, weak IT-business communications, and ineffective promotion of the role of IT. Sensegiving does not mean telling executives what to think about IT but rather how to think about IT and its impacts at various points within the firm. Whether IT impacts are rated high or low, efforts to create increased consensus among executives can greatly enhance value from IT.     

A contingency model for creating value from RFID supply chain network projects in logistics and manufacturing environments

In the growing literature on RFID and other network technologies, the importance of organizational transformation at the supply chain level has been recognized. However, the literature lacks conceptual model development and salient mechanisms for achieving the level of organizational transformation required for stakeholders to realize the full business benefits from RFID projects. Furthermore, the RFID adoption, use, and impact studies to date largely focus on a single firm setting and on the retail sector. Therefore, this study intends to fill this knowledge gap in the literature, and develops a contingency model for creating value from RFID supply chain projects in logistics and manufacturing environments. For our model development, we draw upon extant diverse literatures, particularly the framework for IT-enabled business transformation, and leadership and organizational learning. The framework postulates a positive relationship between the level of organizational transformation effected by the use of information technology (IT) and the level of business benefits realized from IT. The contingency model draws on the framework, and explicates five contingency factors influencing value creation from RFID supply chain projects: environmental upheaval; leadership; second-order organizational learning; resources commitment; and organizational transformation. Using the contingency model as a conceptual guide, we also perform an analysis of longitudinal real-world case data from a Canadian third-party logistics service firm's seven-layer supply chain RFID projects. The case study analysis provides evidence for the imperative of the contingency factors identified in the model for creating value from the RFID projects. Furthermore, it also reveals the differential costs for the focal firm and the up-stream manufacturing as a key barrier to realizing the full RFID benefits at the supply chain level.     

An enterprise integration methodology

As more and more organizations pursue the benefits of e-business, they are looking to a process called enterprise integration, or EI, as a key technical enabler in transforming their business processes. A typical form of EI is Webification; in this scenario, a company wants to offer its existing products and services over the Internet, so it builds Web front-end systems and integrates them to its backend legacy systems. (In this article, we use "legacy system" to mean any IT system already in operation.) A more complex El scenario involves enterprise application integration. By this process, the organization links up previously separate and isolated systems to give them greater leverage. For example, an organization might integrate a customer-relationship-management system, a call center system, and legacy customer account systems to give the organization a consolidated view of its customers. An emerging EI scenario is business-to-business (B2B) integration (also called extended enterprise models), which occurs when an organization integrates its own business processes with those of its business partners to improve efficiency within a collaborative value chain.     

Pragmatic correlation analysis for probabilistic ranking over relational data

It is widely recognized that effective ranking methods for relational data (e.g., tuples) enable users to overcome the limitations of the traditional Boolean retrieval model and the hardness of structured query writing. To determine the rank of a tuple, term frequency-based methods, such as tf × idf (term frequency × inverse document frequency) schemes, have been commonly adopted in the literature by simply considering a tuple as a single document. However, in many cases, we have noted that tf × idf schemes may not produce effective rankings or specific orderings for relational data with categorical attributes, which is pervasive today. To support fundamental aspects of relational data, we apply the notions of correlation analysis to estimate the extent of relationships between queries and data. This paper proposes a probabilistic ranking model to exploit statistical relationships that exist in relational data of categorical attributes. Given a set of query terms, information on correlative attribute values to the query terms is used to estimate the relevance of the tuple to the query. To quantify the information, we compute the extent of the dependency between correlative attribute values on a Bayesian network. Moreover, we avoid the prohibitive cost of computing insignificant ranking features based on a limited assumption of node independence. Our probabilistic ranking model is domain-independent and leverages only data statistics without any prior knowledge such as user query logs. Experimental results show that our work improves the effectiveness of rankings for real-world datasets and has a reasonable query processing efficiency compared to related work.     

Machiavellianism,self-monitoring,self-promotion and relational aggression on Facebook

Machiavellianism is a personality trait characterized by cynicism, emotional detachment and a willingness to manipulate others. Research investigating the behavior of Machiavellian men and women has focused on its influence in offline relationships. The popularity of social networking sites suggests that it is also important to consider the interactions of Machiavellian men and women in this context as well. Men (N = 54) and women (N = 189) completed questionnaires assessing Machiavellianism, self-monitoring, self-promotion and relational aggression. Analyses revealed that women who were high in Machiavellianism engaged in more dishonest self-promotion and relational aggression towards a close friend on Facebook whilst males with high levels of Machiavellianism engaged in more self-promoting behavior. In addition, both men and women high in Machiavellianism engaged in more self-monitoring. The findings demonstrate the importance of considering the influence of personality on online behavior and associated gender differences.     

Information technology outsourcing through a configurational lens

This paper explores the value of a configurational approach to IT outsourcing by developing a framework for IT outsourcing effectiveness. Taking a process view of outsourcing and drawing on the relational view of the firm, the framework identifies four high-level dimensions that correspond to an organization’s resource position in four key areas: organizational IT value position, organizational IT asset position, relational asset position, and relational capability position. A novel structured method is used to identify the congruent outsourcing configurations within the range of possible outsourcing configurations based on the interdependencies among the four dimensions. Three congruent outsourcing configurations, designated asset dependence, relational dependence, and independence, emerge from this analysis. Drawing on the assumptions of configurational theory about organizational change and taking a dynamic perspective, the framework is extended to describe how organizations transition between outsourcing configurations over time. This paper demonstrates how a configurational approach can address three potential problems of the outsourcing literature and advance outsourcing research.