Refocusing where and how IT value is realized: An empirical investigation
OmegaPublished 1 August 1996
Arun Rai, Ravi Patnayakuni, Nainika Patnayakuni
Citations60
SJR quartileQ1
SJR score2.31
SNIP2.20
Generate an AI Snapshot to get a quick, structured summary of this paper.
Study Snapshot
ObjectiveStudy objective
MethodsResearch methodology
PopulationPopulation studied
Sample sizeSample sizes
OutcomesStudy outcomes here
ResultsStudy results comes here
LimitationsResearch study limitations comes here
A concise AI-generated summary of the paper will appear here once you click Generate AI Snapshot.
TL;DR
Analysis of the results suggest that the effect of IT investments should be assessed simultaneously on both aggregate and intermediate performance, as departments with 'high' efficiency may be unable to better leverage each additional dollar spent on IT.
Abstract
This study examines the direct and interaction effects of IT investments and IS department efficiency on different facets of firm performance. Specifically, measures for financial, sales, and intermediate firm performance are considered. IS budget is used as a measure of IT investment; asset turnover and labor productivity are used as intermediate performance measures; and sales per IS employee and income per IS employee are used as measures of IS department efficiency. Secondary sources were used to construct a database of 210 firms, which was used for statistical analysis. Our results suggest that; (i) IS budget is not related to financial firm performance, but is positively related to sales performance; (ii) The results for intermediate performance were mixed; (iii) IS efficiency had no impact on the relationship between IS budget and firm performance measures, except market share. Analysis of the results suggest that the effect of IT investments should be assessed simultaneously on both aggregate and intermediate performance. Furthermore, IS departments with 'high' efficiency may be unable to better leverage each additional dollar spent on IT. This has significant implications for organizations considering radical downsizing and elimination of their IS departments, as in the process they could reduce their conversion effectiveness.
Keywords
Business, Management and Accounting
Communications of the ACMThe productivity paradox of information technology
2,430 Citations1993Erik Brynjolfsson
The increased interest in the «productivity paradox,» as it has become known, has engendered a significant amount of research, but thus far, this has only deepened the mystery.
Information Systems ResearchInformation Technologies and Business Value: An Analytic and Empirical Investigation
1,149 Citations1995Anitesh Barua, Charles H. Kriebel +1 more
This paper proposes and test a new process-oriented methodology for ex post measurement to audit IT impacts on a strategic business unit SBU or profit center's performance and shows significant positive impacts of IT at the intermediate level.
Information Systems ResearchThe Relationship Between Investment in Information Technology and Firm Performance: A Study of the Valve Manufacturing Sector
937 Citations1992Peter Weill
Heavy use of transactional IT investment was found to be significantly and consistently associated with strong firm performance over the six years studied and neutral in the long term and associated only with relatively poorly performing firms in the short term.
MIS QuarterlyBusiness Value of Information Technology: A Study of Electronic Data Interchange
920 Citations1995Tridas Mukhopadhyay, Sunder Kekre +1 more
This study estimates the dollar benefits of improved information exchanges between Chrysler and its suppliers that result from using EDI and concludes that system wide, this translates to annual savings of $220 million for the company.
Information Systems ResearchThe Impact of Information Technology Investment Announcements on the Market Value of the Firm
651 Citations1993Brian L. Dos Santos, Ken Peffers +1 more
Empirical evidence indicates that, on average, IT investments are zero net present value NPV investments; they are worth as much as they cost; innovative IT investments, however, increase the value of the firm.
Medical Entomology and ZoologyCorporate Information Systems Management: Issues Facing Senior Executives
357 Citations1995James I. Cash, James L. McKenney +1 more
Corporate Information Systems Management, Third Edition explains the relevant issues of effective management of information services activities and highlights the areas of greatest potential application of the technology.
Communications of the ACMCSCW challenges
357 Citations1993Kaj Grønbæk, Morten Kyng +1 more
This paper investigates how to support work and in particular cooperation in large-scale technical projects in a specific Danish engineering company and it uncovers challenges to Computer Supported Cooperative Work (CSCW) in this setting.
Management SciencePerformance and the Use of an Information System
342 Citations1975Henry C. Lucas
The results confirm the general relationships among classes of variables in the model, but specific relations among variables are complex and depend heavily on the environment of the organization.
TechnometricsApplied Linear Regression Models
336 Citations1990Farid Kianifard
This edition includes new topics, such as: robust tests for constancy of the error variance, smoothing techniques to explore the shape of the regression function, robust regression and non-parametric regression techniques.
Information & ManagementThe relationship between computerization and performance: A strategy for maximizing the economic benefits of computerization
296 Citations1983William L. Cron, Marion G. Sobol
Results indicate that computerization is related to overall performance, and users versus non-users of computers, three levels of usage, and class of computer usage indicate that non- users tend to be small firms with about average overall performance.
The Review of Economics and StatisticsAssessing the Productivity of Information Technology Equipment in U.S. Manufacturing Industries
249 Citations1997Catherine J. Morrison
The underlying substitution patterns suggest that high-tech capital expansion increases demand for most capital and noncapital inputs overall, but saves on materials inputs in durables industries, and in nondurables industries increasing high-Tech intensity may be a factor underlying stagnating labor demand.
Journal of Management Information SystemsFinancial Impact of Information Processing
229 Citations1986Donald H. Bender
Research conducted in the life insurance industry reveals that the economic benefit of automated systems might be evaluated best by measurements involving a company’s entire expenditure for information processing as opposed to the economic benefits derived from individual systems.
Organization ScienceOrganizational Performance and Information Technology Investment Intensity in the Insurance Industry
227 Citations1991Sidney E. Harris, Joseph Katz
Evidence is presented that indicates that firm performance was linked to the level of information technology investment intensity, and in top performance insurance firms 1 information technology costs as a proportion of total operating costs were higher, than in weak performance firms.
Organization ScienceRewards to Investors in Innovative Information Technology Applications: First Movers and Early Followers in ATMs
219 Citations1995Brian L. Dos Santos, Ken Peffers
An extensive longitudinal study of the effects of early adoption of automated teller machines ATMs by banks, on market share and income spans the period from 1971 to 1983 and includes 2,534 banks from across the United States.
AIS Electronic Library (AISeL) (Association for Information Systems)IS INFORMATION SYSTEMS SPENDING PRODUCTIVE? NEW EVIDENCE AND NEW RESULTS
206 Citations1993Erik Brynjolfsson, Lorin M. Hitt
The "productivity paradox" disappeared by 1991, at least in a sample of firms using new firm-level data on several components of IS spending for the period 1987 to 1991.
Information Systems JournalEvaluating Information Technology investments: research findings and reappraisal
168 Citations1992Leslie P. Willcocks
A fall‐off in evaluation at subsequent project stages, little attempt to link evaluation across the lifetime of systems, and a fragmented approach to learning from the evaluation experience for future investments are found.
AIS Electronic Library (AISeL) (Association for Information Systems)INFORMATION SYSTEMS, TELECOMMUNICATIONS, AND THEIR EFFECTS ON INDUSTRIAL ORGANIZATION
157 Citations1986Eric K. Clemons, Steven O. Kimbrough
An initial examination of the effects of information systems and telecommunications on the competitive position of firms is presented and guidelines for choosing opportunities that convey sustainable competitive advantage are provided.
Oxford University Press eBooksInformation Technology and the Corporation of the 1990s: Research Studies
144 Citations1994Thomas J. Allen, Michael S. Scott Morton
A significantly lower 1-year perineal hernia rate after biological mesh closure is a promising secondary finding that needs longer follow-up to determine its clinical relevance.
National Bureau of Economic ResearchAssessing the Productivity of Information Technology Equipment in U.S. Manufacturing Industries
117 Citations1991Catherine J. Morrison, Ernst R. Berndt
AIS Electronic Library (AISeL) (Association for Information Systems)The Three Faces of IT Value: Theory and Evidence
109 Citations1994Lorin M. Hitt, Erik Brynjolfsson +1 more
It is argued that productivity, consumer value and business performance are actually separate questions and that the empirical results on IT value depend heavily on which question is being addressed and what data are being used.
MIS QuarterlyIs Office Productivity Stagnant?
84 Citations1991Raymond R. Panko
The basis for concern that office productivity has been stagnant in recent years is examined, which would have profound implications for both IT researchers and practitioners.
AIS Electronic Library (AISeL) (Association for Information Systems)Dependent variables for the study of firm and industry-level impacts of information technology
76 Citations2011J. Yannis Bakos
AIS Electronic Library (AISeL) (Association for Information Systems)ASSESSING THE IMPACT OF INFORMATION TECHNOLOGY ON ENTERPRISE LEVEL PERFORMANCE
69 Citations1986Kevin Crowston, Michael E. Treacy
Research that has been performed on enterprise level impacts of information systems, with a particular emphasis on research that has attempted to measure those impacts is reviewed, including a survey of articles published within the last ten years.
ORGANIZATIONAL PERFORMANCE, SIZE, AND THE USE OF DATA PROCESSING RESOURCES
62 Citations1983Jon Turner
No relationship is found between organizational performance and the relative proportion of resources allocated to data operating cost and the intensity of data processing use, which raises questions about the extent of benefits obtained from a data processingintensive strategy as well as Questions about the efficiency with which firms convert capital and labor into applications systems.
Profitability and information technology capital intensity in the insurance industry
60 Citations2003Sidney E. Harris, Jonathan L. Katz
Technological Forecasting and Social ChangeTechnology and the services sector: The hidden competitive challenge
48 Citations1988Stephen S. Roach
An attempt is made to provide a detailed industry-by-industry assessment of services sector spending on information technology, revealing a significantly greater dependence by services on such technology as a factor of production.