To spend or not spend: IT infrastructure Challenges

Numerous studies have explored IT expenditure benefits and the options such expenditurecreates. These options are seen as intangible assets created by investing in IT (Kholi et al,2012). Benefits of IT Expenditure (BITE) are assessed by the perception of senior executives.Perceptions of BITE are subjective and are important as there is little objective measurementat the process level (Tallon and Kramer, 2007). If a consensus between executives can beestablished it improves the prospects for an accurate understanding of processes (Tallon, 2000).This research therefore develops a conceptual framework to facilitate consensus for executiveperceptions that shape an understanding of benefits as well as expenditure under sense making(Weick et al, 2005, Tallon, 2014) and sense giving (Rouleau, 2005, Weick et al, 2005). Theshaping of understanding of benefits (BITE) and expenditure (ITE) are needed for the ex antecontracting of a business case as well as the ex poste governance of IT infrastructure

The Current State of and Possible Future Avenues for IT Value Research: A Review of the past 10 Years

Since the ongoing proliferation of information technology (IT) in our private and professional lives, researchers have been concerned with the conceptualization and measurement of the “value” that technology brings us. To this end, researchers have based their assumptions and theories on the technological achievements and perceptions of technology at that time. Ever since the introduction of smart phones, broadband Internet, and social networks, much has changed in the way we perceive and appropriate IT value. In order to identify possible white spots for future research, we present a systematic literature review of the past 10 years of research in this area. In doing so, we develop a taxonomy for analyzing the IT value literature. The results of our analysis indicate that the majority of current work focuses on ex post measurement of the monetary value of IT for businesses. Only a few articles were found that employed an alternative lens in defining IT value. With the blurring boundaries between private and professional life, these approaches become increasingly more important. We discuss the general implications of our findings with a view to possible new themes for the next years of research

Towards a Well-Founded Valuation of Managerial Fleibilities in IT Investment Projects - A Multidisciplinary Literature Review

In the IS literature standard financial option pricing models are predominantly used to value real options embedded in uncertain IT projects. Based on a multidisciplinary literature review, we discuss the assumptions implicit in the prevalent Black-Scholes model and argue for relaxed assumptions that better represent characteristics of uncertain IT projects. This is followed by a discussion of real option approaches from the fields of IS, Finance, and Economics in respect of their compliance with these relaxed assumptions. Findings are: (I) by relaxing the assumptions, the option value and project selection decisions are liable to change; (II) several approaches from Finance and Economics literature better comply with our relaxed assumptions compared to existing approaches in IS literature; (III) no existing real option approach complies with all relaxed assumptions. Adapting and enhancing approaches of other disciplines could be a push towards a well-founded valuation of real options embedded in IT projects

Examining Real Options Exercise Decisions in Information Technology Investments

Researchers have advocated real options thinking (ROT) for evaluating and managing risky IT investments to account for managerial decision flexibility. Effective ROT is a three-step process that requires managers to recognize, value, and exercise options embedded in IT projects. Prior research has illustrated the existence of managerial bias in the recognizing and valuing real options. However, little research has examined real options exercise decisions. Hence, we use prospect theory to examine whether IT managers demonstrate systematic biases while exercising real options in IT projects and portfolios. We also study whether one can control or mitigate such biases. We found evidence of biased (suboptimal) real option exercise decisions in IT projects and in IT portfolios. However, we found differences in biased decision making between a single project and a portfolio scenario. We also found that project scale and real option type influenced vulnerability of a project to biased decision making. In addition, simplifying the presentation of the net effects of real options exercise decisions can help reduce bias, especially for large project portfolios. We discuss the implications of these results on theory and practice

Blockchain Value Creation Logics and Financial Returns

With its complexities and portfolio-nature, the advent of blockchain technology presents several use cases to stakeholders for business value appropriation and financial gains. This 3-essay dissertation focuses on three exemplars and research approaches to understanding the value creation logics of blockchain technology for financial gains. The first essay is a conceptual piece that explores five main affordances of blockchain technology and how these can be actualized and assimilated for business value. Based on the analysis of literature findings, an Affordance-Experimentation-Actualization-Assimilation (AEAA) model is proposed. The model suggests five affordance-to-assimilation value chains and eight value interdependencies that firms can leverage to optimize their value creation and capture during blockchain technology implementation. The second essay empirically examines the financial returns of public firms\u27 blockchain adoption investments at the level of the three main blockchain archetypes (private-permissioned, public-permissioned and permissionless. Drawing upon Fichman\u27s model of the option value of innovative IT platform investments, the study examines business value creation through firm blockchain strategy (i.e., archetype instances, decentralization, and complementarity), learning (i.e., blockchain patents and event participation), and bandwagon effects using quarterly data of firm archetype investments from 2015 to 2020. The study\u27s propensity score matching utilization and fixed-effects modeling provide objective quantification of how blockchain adoption leads to increases in firm value (performance measured by Tobin\u27s q) at the archetype level (permissionless, public permissioned, and private permissioned). Surprisingly, a more decentralized archetype and a second different archetype implementation are associated with a lower Tobin\u27s q. In addition, IT-option proxy parameters such as blockchain patent originality, participation in blockchain events, and network externality positively impact firm performance, whereas the effect of blockchain patents is negative. As the foremost and more established use case of blockchain technology whose business value is accessed in either of the five affordances and exemplifies a permissionless archetype for financial gains, bitcoin cryptocurrency behavior is studied through the lens of opinion leaders on Twitter. The third essay this relationship understands the hourly price returns and volatility shocks that sentiments from opinion leaders generate and vice-versa. With a dynamic opinion leader identification strategy, lexicon and rule-based sentiment analytics, I extract sentiments of the top ten per cent bitcoin opinion leaders\u27 tweets. Controlling for various economic indices and contextual factors, the study estimates a vector autoregression model (VAR) and finds that finds that Bitcoin return granger cause Polarity but the influence of sentiment subjectivity is marginal and only stronger on bitcoin price volatility. Several key implications for blockchain practitioners and financial stakeholders and suggestions for future research are discussed

Managerial risk in information technology investments : effects of framing, narrow framing and time inconsistent preferences on real options exercise decisions

Real options theory has been advocated as a solution to risky IT investment decisions. IT investments decisions are risky due to uncertainty around future outcomes and the inability of traditional financial measures (like NPV, IRR) to account for inherent managerial flexibility. On the one hand, it is argued that real options analysis captures and formalizes managers' intuition, hence creating a disciplined decision making process. On the other hand, the intuitive valuation of the options is criticized due to the prevalent effects of various judgmental biases. In this dissertation, we explore three potential biases that can affect the real option exercise decisions in terms of either suboptimal option exercise choice due to framing and narrow framing effects, or suboptimal exercise time due to time inconsistent preferences of IT managers. We test for framing effects in individual IT project decisions and narrow framing effects in IT portfolio decisions, by conducting an online experiment among top and mid-level IT professionals. The results show that IT professionals are prone to framing real options at exercise time and simplifying complicated real option exercise decisions by isolating them in IT portfolios. Further, their decisions are influenced by their personal risk preferences. We analyze the effect of time-inconsistent preferences of present-biased managers on the exercise time of real growth and abandonment options and the realized values using a discrete time option valuation model. The results show that present-biased managers are more likely to exercise growth options early when the net payoffs are low, the growth option payoffs have high volatility, and the risk free discount rate is small. Also, present-biased managers are more likely to exercise abandonment option late when the net payoffs from continuing the project are high, salvage value of the project is low, and the rate of change in the salvage value over the period of time is low. In addition, present biased managers are more likely to exercise a growth option early in its life when the project is performing well. We provide implications for practice and IT governance