Which Came First, IT or Productivity? The Virtuous Cycle of Investment and Use in Enterprise Systems

While it is now well established that IT intensive firms are more productive, a critical question remains: Does IT cause productivity or are productive firms simply willing to spend more on IT? We address this question by examining the productivity and performance effects of enterprise systems investments in a uniquely detailed and comprehensive data set of 623 large, public U.S. firms. The data represent all U.S. customers of a large vendor during 1998–2005 and include the vendor’s three main enterprise system suites: Enterprise Resource Planning (ERP), Supply Chain Management (SCM), and Customer Relationship Management (CRM). A particular benefit of our data is that they distinguish the purchase of enterprise systems from their installation and use. Since enterprise systems often take years to implement, firm performance at the time of purchase often differs markedly from performance after the systems “go live.” Specifically, in our ERP data, we find that purchase events are uncorrelated with performance while go-live events are positively correlated. This indicates that the use of ERP systems actually causes performance gains rather than strong performance driving the purchase of ERP. In contrast, for SCM and CRM, we find that performance is correlated with both purchase and golive events. Because SCM and CRM are installed after ERP, these results imply that firms that experience performance gains from ERP go on to purchase SCM and CRM. Our results are robust against several alternative explanations and specifications and suggest that a causal relationship between ERP and performance triggers additional IT adoption in firms that derive value from their initial investment. These results provide an explanation of simultaneity in IT value research that fits with rational economic decision-making: Firms that successfully implement IT, react by investing in more IT. Our work suggests replacing “either-or” views of causality with a positive feedback loop conceptualization in which successful IT investments initiate a “virtuous cycle” of investment and gain. Our work also reveals other important estimation issues that can help researchers identify relationships between IT and business value.NYU, Stern School of Business, IOMS Department, Center for Digital Economy Researc

Which Came First, IT or Productivity? The Virtuous Cycle of Investment and Use in Enterprise Systems

While it is now well established that IT intensive firms are more productive, a critical question remains: Does IT cause productivity or are productive firms simply willing to spend more on IT? We address this question by examining the productivity and performance effects of enterprise systems investments in a uniquely detailed and comprehensive data set of 623 large, public U.S. firms. The data represent all U.S. customers of a large vendor during 1998–2005 and include the vendor’s three main enterprise system suites: Enterprise Resource Planning (ERP), Supply Chain Management (SCM), and Customer Relationship Management (CRM). A particular benefit of our data is that they distinguish the purchase of enterprise systems from their installation and use. Since enterprise systems often take years to implement, firm performance at the time of purchase often differs markedly from performance after the systems “go live.” Specifically, in our ERP data, we find that purchase events are uncorrelated with performance while go-live events are positively correlated. This indicates that the use of ERP systems actually causes performance gains rather than strong performance driving the purchase of ERP. In contrast, for SCM and CRM, we find that performance is correlated with both purchase and golive events. Because SCM and CRM are installed after ERP, these results imply that firms that experience performance gains from ERP go on to purchase SCM and CRM. Our results are robust against several alternative explanations and specifications and suggest that a causal relationship between ERP and performance triggers additional IT adoption in firms that derive value from their initial investment. These results provide an explanation of simultaneity in IT value research that fits with rational economic decision-making: Firms that successfully implement IT, react by investing in more IT. Our work suggests replacing “either-or” views of causality with a positive feedback loop conceptualization in which successful IT investments initiate a “virtuous cycle” of investment and gain. Our work also reveals other important estimation issues that can help researchers identify relationships between IT and business value.NYU, Stern School of Business, IOMS Department, Center for Digital Economy Researc

Role of Social Media Networks in Penetration of International Markets by Small and Medium Enterprises in Kenya: a case of Small Businesses at Yaya Centre Nairobi County

By making use of electronic media and social networks, the ways of doing businesses by many SMEs in Kenya has rapidly changed and evolved. New business ventures are budding because of globalisation and this has lead to abolition of geographical barriers. Social media networks allow a business to be where the customers are. The sites rely on the habitual presence of millions of users. From the young to the elderly generations, most people spend many hours daily on sites like Face book and Twitter, watching videos on YouTube, sharing photos on Flicker and instagram among others. This helps most users to be informed about the products and services offered by a particular business online either in the same geographical position or overseas and means in which they can be able to access the products or services.  This study therefore sought to investigate whether the Kenyan Small and Medium Enterprises have followed suit to this globalization trend and whether there were tangible benefits attached to this new mode of doing business. This study used descriptive statistics and targeted a population of 65 respondents operating SMEs at Yaya centre in Nairobi. The study concluded that the  benefits of social media for internationalization include the huge exposure that company can generate, the relatively low costs associated with it, the possibilities for customer segmentation and targeting it provides and the market insight that can be gained from analyzing consumers’ online behaviour and interacting with them through social networks. For SMEs to full use social media networks in their business, the government needs to increase the diffusion of internet infrastructure and hardware required for accessing the internet. Diffusion could help SMEs in developing countries to gain access to social media networks, internationalize and this would ultimately lead to tremendous performance Keywords: social media, globalisation, SMEs, social media business strategy and Keny

The Valuation Damage from Financial Systems Weaknesses: A Study of SOX Section 404 Disclosures

IT systems and effective internal controls are essential to reliable financial reporting and good corporate governance. For this reason, Section 404 of the Sarbanes-Oxley Act of 2002 (SOX) identified IT and financial systems as a key source of financial reporting risk. Disclosures made in 68 10K filings from 46 companies in 2005-2007 reported that internal controls over financial reporting were ineffective due to shortcomings in IT systems. Although evidence on the financial payoffs from IT is mixed, material weaknesses in financial controls due to IT clearly have negative shareholder value consequences. For these firms, an average abnormal return of –1.6% was found over a 2-day (0,+1) window around the reporting date. Moreover, 23 of the companies failed to remediate their control problems, and suffered an average –2.1% abnormal return in the 2-day window around their next (2006) 10K filing date. Longer term returns on portfolios of these non-compliant companies also reflect underperformance. The shareholder returns evidence shows that IT management requirements for SOX compliance contribute to good corporate governance and shareholder value

Contribución del comercio electrónico al desempeño de las PyMEs industriales: un modelo estructural

El rol que juegan las Tecnologías de la Información y comunicación (TIC) para lograr un mejor desempeño organizacional aún requiere de un análisis más profundo entre las pequeñas y medianas empresas (PyMEs) de los países en desarrollo. Este estudio pretende ampliar la literatura empírica sobre la relación entre TIC, comercio electrónico y desempeño de las PyMEs en países en desarrollo. Para alcanzar este objetivo, utilizamos una muestra de 87 empresas manufactureras de la ciudad de Bahia Blanca, Argentina correspondiente al año 2015. Mediante la estimación de un Modelo de ecuación estructura, se obtiene que la adopción del comercio electrónico posee una influencia positiva y significativa en las ventas de las PyMEs la cual es potenciada por el nivel de uso de las TIC. Otros factores organizacionales tales como el tamaño de la empresa y los programas públicos explican el desempeño, pero no son predictores significativos de la adopción del comercio electrónico.The role Information and Communication Technologies (ICT) play in achieving a better organizational performance still needs further analysis among small and medium sized enterprises (SME) from developing countries. This study aims to extend the empirical literature on the relationship between ICT, electronic commerce and SME performance in developing countries. To achieve this goal, we employ a sample of 87 manufacturing firms from the city of Bahía Blanca, Argentina in the year 2015. By estimating a structural equation model, we obtain that electronic commerce adoption has a positive and significant influence on SME sales which is reinforced by the level of ICT use. Other organizational factors such as firm size and public programs explain performance, but are not significant predictors of the electronic commerce adoption.Fil: Alderete, Maria Veronica. Universidad Nacional del Sur. Departamento de Economía; Argentina. Consejo Nacional de Investigaciones Científicas y Técnicas. Centro Científico Tecnológico Conicet - Bahía Blanca. Instituto de Investigaciones Económicas y Sociales del Sur. Universidad Nacional del Sur. Departamento de Economía. Instituto de Investigaciones Económicas y Sociales del Sur; Argentin

Strategic Alignment: What Else? A Practice Based View of IS Value.

Pour l’essentiel, les recherches traitant des valeurs stratégiques du SI restent dans le paradigme de l’alignement stratégique, et utilisent des notions telles que celles de "processus" ou "d’activités". En s’appuyant sur la perspective offerte par les théories de la pratique, cet article offre une alternative en distinguant trois formes de praxis et des valeurs spécifiques.Literature about IS strategic management or IS strategic value is abundant. Nonetheless, the bulk of existing studies are focused on the concept of alignment. They do not make sense of a strategic value "in practice" and still draw on notions such as activity or process to make sense of alignment. By means of a practice-based view of technology, three praxis are suggested here for the modeling of strategic value: legitimacy-related (based on adoption praxis), assimilative (related to design and acceptance praxis) and appropriative (linked to local adaptation and improvisation praxis). They are introduced by means of a "thought experiment" (a short story about a rifle).Strategic alignment; IS strategic value; Practice-based views; strategic value in practice; thought experiments;

Are design networks shaped by their own outcomes? coordination processes between actors and artefacts

This paper sets the basis for a research project focused on collaborative social network’s genesis and dynamics. It introduces a research framework for the empirical investigation of a network focused on the design of a shared artefact, the so-called Web services Architecture . Our hypothesis is that network artefact’s characteristics, seen as the final outcome of a collaborative process, influence and drive the genesis and the structure of the social network that is designing it. We embraced this view in order to avoid a limitation of the traditional perspectives that consider the network structure as exogenous and stable. We consider the reciprocal influence between the artefact and the social network structure, with a phase in which the desired artefact may shape the network genesis and a phase in which the emergent network’s structure may drive the artefact design

Firm and Employee Effects of an Enterprise Information System: Micro-econometric Evidence

We investigate the impact of adopting an enterprise resource planning (ERP) system on performance changes and employee outcomes in a retail chain. We find that: (i) sales and inventory turnover initially drop by 7 % and recover in 6-12 months; (ii) inventory turnover recovers more quickly for establishments that adopt ERP later; (iii) employee outcomes, including increased workload, greater job difficulty and enhanced multitasking, vary significantly over time, though implications for employee welfare are ambiguous.enterprise resource planning; retailing; Finland; IT