The Effect of Information Technology (IT) Investments on Firm-Level Performance in the Healthcare Industry

Background: The return on investment for information technology (IT) has been the subject of much debate throughout the history of management information systems research. Often referred to as the productivity paradox, increased IT investments have not been consistently associated with increased productivity. Understand individual IT factors that directly contribute to business value should provide insight into the productivity paradox. Purpose: The effects of 3 different firm-level IT characteristics on financial performance in the health care industry are studied. Specifically, the effects of IT budget, IT outsourcing, and the relative number of IT personnel on firm-level financial performance are analyzed. Methods: Regression analysis of archival survey data for 914 Integrated Healthcare Delivery Systems is performed. Results: IT budgetary expenditures and the number of IT services outsourced are associated with increases in the profitability of Integrated Healthcare Delivery Systems, whereas increases in IT personnel are not significantly associated with increased profitability. Each one tenth of a percentage increase in IT expenditures is associated with approximately $950,000 in increased profit for an average-sized Integrated Healthcare Delivery System. Implications: To increase profitability, IT administrators should increase IT budgetary expenditures along with IT outsourcing levels. IT administrators in the health care industry can use such findings during budgeting cycles to justify increased investments in IT personnel as being budget neutral while increasing organizational capacity

The (un)happiness of knowledge and the knowledge of (un)happiness: Happiness research and policies for knowledge-based economies

Paper presented to the International Conference Policies for Happiness, June 14-17, 2007, Certosa di Pontignano, University of Siena, Italy.This paper explores the current state and interfaces of two broad policy discourses, i.e. that of policies for knowledge-based economies (KBEs) and policy implications of happiness research, which so far have exhibited little explicit cross-referencing. I first review the state of 'mainstream' knowledge policy associated with the OECD, the related but somewhat separate literature on information society indicators, and some 'non-mainstream' knowledge policy analysis. This is followed by a brief overview of some of the major policy implications and controversies in happiness research. Next, I discuss major interfaces of the two policy discourses. They mostly concern the nexus of education, work and innovation. I also illustrate the diversity of beliefs and values about some core elements of KBEs in a group of what are usually regarded as similar countries, and advocate the use of subjective variables to capture these differences. The main argument put forward in this paper is that policies for KBEs should be informed by insights from happiness research

Information technology and cost efficiency in Malaysian banking industry

It is argued that information technology can increase cost efficiency of banks by offering opportunities to substitute across inputs into production – for example, to substitute computer technology and information networks for labor. Hence, the transition to a knowledge-based financial sector would lead to banks becoming more competitive, more cost effective and better able in managing risks. As such, those banks that failed to make this transition are less able to compete as they lack the capability to innovate and face higher delivery costs. The main objectives of this paper are to determine the impact of IT on banking efficiency and its economies of scale using a sample of Malaysian banks. To achieve these objectives, stochastic cost frontier method is employed to estimate bank efficiency and panel data approach were used to examine the impact of IT on bank efficiency. The results indicate that the impact of IT on bank efficiency increases with increase in bank size, hence further supporting the process of bank mergers that are currently undertaken in the Malaysian banking industry

Innovation and Information Technology in Services

The missing effect of investments of firms in information and communication technologies on productivity is studied by various recent papers (e.g. Oliner and Sichels 1994, Landauer 1995, Brynjolfsson and Hitt 1996). Several explanations are given for this missing link. Our paper deals with two of them, using two newly available data sets for the German service sector. Using data from a survey of innovative activities in services we show that investment in information technology (IT) has a stronger effect on the quality of services than on the productivity of the IT-using firm. IT investment seems to be especially effective when innovations enhance the delivery speed and the spatial or temporal availability of service. Moreover, data of the German IT survey point towards the need to differentiate between types of IT investment. It is shown that especially the most recent generation of IT as indicated by the number of PCs used is the source of productivity growth whereas traditional IT like mainframes exhibit only minor productivity effects. We conclude from our results that mismeasurement of the quality of new products and processes is one important reason for our inability to uncover the productivity effect of IT. Moreover, dividing IT-investment by the type of IT clarifies that the kind of IT a firm uses is more important for productivity growth what than its quantity. In any case we expect that the bulk of the IT-related productivity growth is still to come. In order to realize the benefits from IT investment entirely, firms have to undergo a large restructuring of business functions. --Information Technology,Productivity,Service Sector

The Economic Impact of Connecticut's Information Technology Industry

information technology, economic impact, Tornqvist index

Measuring productivity in the new economy

The neo-classical theory of production identified only two production factors: labour and capital. Paul Romer proposed a change to the neo-classical model by introducing the technology (and implicitly knowledge on which it is based) as an inherent factor of the economic system. The Internet economy offers the possibility to develop the businesses in a totally new way by innovatively using the IT&C. This increase is highlighted by the increase of the Multifactor Productivity in the late 1990’s in the USA economy.productivity, neo-classical theory, internet economy, economic system

The North-South Digital Divide in Information and Communication Technologies Development: the Case for Spanish Regions

The "New Economy" is a concept that is associated with the growth of the US economy in the second half of the nineties, which were characterised by high growth in GDP. In attempt to find an explanation for these events, research to date cites the main determinant to be the marked rise in labour productivity that came about as a result of the impact of Information and Communication Technologies, particularly the Internet. The purpose of the present study is to examine the phenomenon that has arisen around this "new or digital economy" and the development of the Internet from the macro and microeconomic viewpoint and then show how the Spanish regions lag behind the rest of Europe in this respect. Firstly, we present international evidences of the positive impact of ICT in terms of labour and multifactorial productivity in national economies, industrial sectors and firms. These evidences are contrasted with some spanish studies. Secondly, we measure the importance of ICT in Europe. We base our method on a set of indicators, classified into three areas: infrastructure and size of sector, use of Internet and electronic commerce, and social and economic effects. We then examine the Spanish situation electronic commerce, and social and economic effects. We then examine the Spanish situation within the context of the rest of Europe, and discover a major north-south digital divide affecting certain areas, along with major interregional disparities. As far as Internet development is concerned, there are major regional differences. The paper points out the fact that Spain registers the highest standard deviation, in other words, the greatest regional differences, which, reflected in terms of different synthetic/composite indicators. This lag in progress contrasts with Spain's public policies aimed at promoting the Internet. Nevertheless, Internet development can provide the opportunity to close this gap within the EU. It may, however, increase discrepancies between the regions, by giving regions with higher per capita income an advantage in terms of productivity and competitiveness, unless a determined effort is made to implement actions aimed at developing the information society.

The rationale of e-health evaluation: The case of NHS Direct

An important area of research is that of the evaluation of e-health services. A holistic e-health evaluation framework should address the aspects that are hampering healthcare services from embracing the full potential of information and communication technologies towards successful e-health initiatives. Towards building a holistic evaluation framework for e-health services, this paper is intended to examine the rationale of e-health evaluation, as the paper argues that this aspect should be addressed first in the development of such a framework. NHS Direct which is one of the largest e-health services in the world has been chosen to discuss and validate a set of evaluation rationales and their applicability in practice

Measurement Error in Performance Studies of Health Information Technology: Lessons from the Management Literature

Just as researchers and clinicians struggle to pin down the benefits attendant to health information technology (IT), management scholars have long labored to identify the performance effects arising from new technologies and from other organizational innovations, namely the reorganization of work and the devolution of decision-making authority. This paper applies lessons from that literature to theorize the likely sources of measurement error that yield the weak statistical relationship between measures of health IT and various performance outcomes. In so doing, it complements the evaluation literature’s more conceptual examination of health IT’s limited performance impact. The paper focuses on seven issues, in particular, that likely bias downward the estimated performance effects of health IT. They are 1.) negative self-selection, 2.) omitted or unobserved variables, 3.) mis-measured contextual variables, 4.) mismeasured health IT variables, 5.) lack of attention to the specific stage of the adoption-to-use continuum being examined, 6.) too short of a time horizon, and 7.) inappropriate units-of-analysis. The authors offer ways to counter these challenges. Looking forward more broadly, they suggest that researchers take an organizationally-grounded approach that privileges internal validity over generalizability. This focus on statistical and empirical issues in health IT-performance studies should be complemented by a focus on theoretical issues, in particular, the ways that health IT creates value and apportions it to various stakeholders

Public Procurement for Innovation (PPI) – a Pilot Study

Public organizations may place an order for something (normally a product or a system) that does not exist. This “something” has to be developed by the supplier before it can be delivered. In other words, R&D and/or innovation are needed before delivery can take place. Until about 10 years ago this phenomenon was called “public technology procurement” Edquist et al 2000). This vocabulary of the 1990s and earlier has changed; the concept of “technology” has been replaced by the concept of “innovation”, reflecting a widening of the content of the notion. The phenomenon is a matter of using public demand (or similar) to trigger innovation. We will use the term “public procurement for innovation (PPI)” to denote this phenomenon. Further definitions are presented in section 2.4.Innovation Systems; innovation policy