Market reaction to application service provider (ASP) adoption: An empirical investigation
Information & ManagementPublished 5 February 2010
Bong-Keun Jeong, Antonis C. Stylianou
Citations27
SJR quartileQ1
SJR score2.92
SNIP2.74
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
The results indicated that ASP adoption announcements were associated with positive increases in the market value of the firm and differences in market returns to ASP adoption were found to depend on strategic adoption intent, firm size, industry, and vendor status.
Abstract
We examined the impact of ASP adoption on the market value of the firms and explored contextual factors in the positive abnormal returns. We employed event study methodology to analyze 268 ASP adoption announcements from 1998 to 2007. The results indicated that ASP adoption announcements were associated with positive increases in the market value of the firm. In addition, differences in market returns to ASP adoption were found to depend on strategic adoption intent, firm size, industry, and vendor status. These results provide useful implications for making decisions about whether, when, and how to adopt ASP to maximize the business value.
Keywords
Decision SciencesBusiness, Management and Accounting
MIS Quarterly<i>Review:</i> Information Technology and Organizational Performance: An Integrative Model of IT Business Value1
3,332 Citations2004Nigel P. Melville, Kraemer +1 more
A model of IT business value is developed based on the resource-based view of the firm that integrates the various strands of research into a single framework and provides a blueprint to guide future research and facilitate knowledge accumulation and creation concerning the organizational performance impacts of information technology.
International Journal of Electronic CommerceThe Effect of Internet Security Breach Announcements on Market Value: Capital Market Reactions for Breached Firms and Internet Security Developers
743 Citations2004Huseyin Cavusoglu, Birendra K. Mishra +1 more
The results show that announcing an Internet security breach is negatively associated with the market value of the announcing firm, and the cost of poor security is very high for investors.
Information Systems ResearchMeasuring Information Technology Payoff: A Meta-Analysis of Structural Variables in Firm-Level Empirical Research
671 Citations2003Rajiv Kohli, Sarv Devaraj
The results indicate that the sample size, data source, and industry in which the study is conducted influence the likelihood of the study finding greater improvements on firm performance, and the choice of the dependent variable appears to influence the outcome.
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.
Information Systems ResearchResearch Report: A Reexamination of IT Investment and the Market Value of the Firm—An Event Study Methodology
435 Citations2001Kun Shin Im, Kevin E. Dow +1 more
Positive excess return for smaller firms shows that smaller firms can leverage the lower price/performance ratio of new IT and reap greater rewards from IT investments than larger firms.
MIS QuarterlyExamining the Shareholder Wealth Effects of Announcements of Newly Created CIO Positions1
414 Citations2001Debabroto Chatterjee, Vernon J. Richardson +1 more
Findings strongly support the notion that, for firms competing in industries undergoing IT-driven transformation, announcements of newly created CIO positions do indeed provoke positive reactions from the marketplace.
Information Systems ResearchThe Impact of E-Commerce Announcements on the Market Value of Firms
359 Citations2001Mani Subramani, Eric Walden
MIS QuarterlyThe value relevance of announcements of transformational information technology investments
349 Citations2003Bruce Dehning, Vernon J. Richardson +1 more
MIS QuarterlyUnderstanding the Service Component of Application Service Provision: An Empirical Analysis of Satisfaction with Asp Services1
348 Citations2003Anjana Susarla, Anitesh Barua +1 more
MIS QuarterlyThe Value Relevance of Announcements of Transformational Information Technology Investments1
342 Citations2003Bruce Dehning, Richardson +1 more
It is demonstrated that IT strategic role can explain how IT investments in each of the IT strategic roles might affect the firm's competitive position and ultimately firm value.
Information Systems ResearchERP Investments and the Market Value of Firms: Toward an Understanding of Influential ERP Project Variables
304 Citations2006C. Ranganathan, Carol V. Brown
Findings provide empirical support for prior theory about the organizational integration benefits of ERP systems, the contribution of complementary resource investments to the business value of IT investments, and the growth options associated with IT platform investments.
Journal of Information SystemsMarket Reaction to ERP Implementation Announcements
294 Citations2001David Hayes, James E. Hunton +1 more
This research is to examine how the capital market responds when a firm announces that it plans to implement an enterprise resource planning (ERP) system.
Journal of Management Information SystemsThe Shareholder-Wealth and Trading-Volume Effects of Information-Technology Infrastructure Investments
238 Citations2002Debabroto Chatterjee, Carl Pacini +1 more
Evidence exists that infrastructure investments generate greater excess returns and a larger increase in trading volume than applications investments do, providing empirical support for the potential of IT infrastructure investments to be perceived as a platform for growth and revenue generation opportunities in contemporary business firms.
Decision SciencesKnowledge Management Using Information Technology: Determinants of Short‐Term Impact on Firm Value*
218 Citations2005Rajiv Sabherwal, Sanjiv Sabherwal
This article employs a contingency approach, arguing that the KM announcement would have a positive short-term impact on firm value in some conditions but not in others, and provides empirical support for the theory-based arguments, and helps develop a contingency framework of the effectiveness of KM efforts.
European Journal of Information SystemsExploring the supply-side of IT outsourcing: evaluating the emerging role of application service providers
141 Citations2001Wendy L. Currie, Philip Seltsikas
How application outsourcing is currently changing the nature of the outsourcing contract and relationship between client and supplier will have significant implications for traditional outsourcing and ERP vendors in the software and computing services industry.
Information & ManagementMarket reactions to E-business outsourcing announcements: An event study
119 Citations2006Manish Agrawal, Rajiv Kishore +1 more
Contrary to expectations, outsourcing E-business projects with high task complexity also led to positive results, and the process was analyzed and found that these three factors explained more than 20% of the variance in abnormal returns.
Information & ManagementAn exploratory study into factors of service quality for application service providers
118 Citations2005Qingxiong Ma, John Pearson +1 more
This study attempted to fulfill this need by identifying the dimensions of service quality for the ASP industry through both qualitative and quantitative approaches and identified seven dimensions (features, availability, reliability, assurance, empathy, conformance, and security).
Information & ManagementA theory of application service provider (ASP) use from a client perspective
107 Citations2004Michael Alan Smith, Ram L. Kumar
A theory of ASP adoption and use from the client's perspective is developed based on analysis of primary and secondary data on ASP use and analysis of literature on IS outsourcing and EDI.
Information & ManagementInformation technology investments and firm value
99 Citations2005Bruce Dehning, Vernon J. Richardson +1 more
A firm value model is developed to assist IT managers and researchers in understanding the multiple effects that IT investments have on firm value and is demonstrated by evaluating a major stream of research in MIS--event studies of IT investment announcements.
Journal of Management Information SystemsReexamining the Value Relevance of E-Commerce Initiatives
87 Citations2004Bruce Dehning, Vernon J. Richardson +2 more
Evidence that the traditional event study methodology may not provide an accurate measure of abnormal returns during periods of high market volatility is found, and an alternative methodology is proposed.
European Journal of Information SystemsDeterminants of ASP choice: an integrated perspective
82 Citations2003Bandula Jayatilaka, Andrew Schwarz +1 more
An integrated, theoretical model is proposed, which combines the transaction cost, resource-based, resource dependency and knowledge-based perspectives, and is used to explain the antecedent conditions useful for making decisions on IT sourcing through ASPs.
Decision Support SystemsThe value of IT to firms in a developing country in the catch-up process: An empirical comparison of China and the United States
61 Citations2006Zhaoli Meng, Sang‐Yong Tom Lee
It is found that IT investment announcements significantly increase firms' market value in China but not in the US, suggesting that IT brings more benefits to firms in China, helping them to catch up with leader firms in the United States.
Journal of Computer Information SystemsThe Impact of Customer-Related it Investments on Customer Satisfaction and Shareholder Returns
36 Citations2006Shana L. Dardan, Antonis C. Stylianou +1 more
This study uses the firms of the University of Michigan American Customer Satisfaction Index for the time period of January 1996 – December 2001, and does find that an investment in customer-related IT both improves customer satisfaction and yields positive abnormal shareholder returns.
Journal of Information Technology Case and Application ResearchRisks and Effects of IS/IT Outsourcing: A Securities Market Assessment
28 Citations2002Daniel A. Peak, John C. Windsor +1 more
Outsourcing appears to benefit the entire firm, the investors, and the CEO, far more than it benefits the IS department and the CIO, as measured by initial reactions in company stocks and listed options.
SSRN Electronic JournalB2B eMarketplace Announcements and Shareholder Wealth
17 Citations2001Andrew H. Chen, Thomas F. Siems
Journal of electronic commerce researchThe Valuation of Ecommerce Announcements during Fluctuating Financial Markets
16 Citations2005Michael J. Dardan, Antonis C. Stylianou +1 more
The effects of power and partnership on application service provider commitment, cooperation, and compliance
11 Citations2004Matthew Swinarski, Rajiv Kishore +1 more
The results show that the client's power and the quality of their partnership with the provider motivates the IT service provider to comply with the contractual obligations, cooperate with the client, and invest additional resources into the IT outsourcing relationship.
Information Management & Computer SecurityHow to choose an ASP: selection guidelines
2 Citations2003Luisa Focacci, Robert J. Mockler +2 more
Various success factors, or best practices selection guidelines, potential ASP customers/users should consider when choosing an ASP are identified.