The Effects of Firm Characteristics on Investor Reaction to IT Investment Announcements

This paper examines the effects of firm characteristics measured by price-to-book (PB) ratio, free cash flow (FCF), and variability of daily stock return (VDR) on investor reaction in the stock market to IT investment announcements. In contrast to previous studies, which focused exclusively on whether or not IT investment announcements led to an abnormal return in the market, this study investigates the extent to which firm characteristics influence the direction and magnitude of cumulative abnormal returns (CARs). Although these firm characteristics critically affect investor reaction to IT investment announcements, existing event studies in the IT literature pay scant attention to them. In spite of the same IT investment (say, developing an ERP system) announcement, the market reaction would vary due to the heterogeneity in financial situations under which the firm operates before the announcement. Contrary to previous studies, the results suggest that IT investment announcements result in significant abnormal returns around the event announcement date when only the announcements made by investing firms were considered. We provide some empirical evidence that investments in IT can have a great impact on firm value. With regard to the firm characteristics in relation to CARs, PB ratio, and variability of daily stock returns significantly affect the investorsí reaction to IT investment announcements. Finally, this study shows IT investment decision makers the implications of drawing greater attention from investors when making IT investment announcements

Membership Dynamics and Network Stability in the Open-Source Community: The Ising Perspective

In this paper, we address the following two questions: (1)How does a participant’s membership decision affect the others (neighbors) with whom he has collaborated over an extended period of time in an open source software (OSS) network? (2) To what extent do network characteristics (i.e, size and connectivity) mediate the impact of external factors on the OSS participants’ dynamic membership decisions and hence the stability of the network? From the Ising perspective, we present fresh theoretical insight into the dynamic and reciprocal membership relations between OSS participants. We also performed simulations based on empirical data that were collected from two actual OSS communities. Some of the key findings include that (1) membership herding is highly present when the external force is weak, but decreases significantly when the force increases, (2) the propensity for membership herding is most likely to be seen in a large network with a random connectivity, and (3) for large networks, at low external force a random connectivity will perform better than a scale-free counterpart in terms of the network strength. However, as the temperature (external force) increases, the reverse phenomenon is observed. In addition, the scale-free connectivity appears to be less volatile than with the random connectivity in response to the increase in the temperature. We conclude with several implications that may be of significance to OSS stakeholders

Analyzing IT Outscoring Relationships as Alliances among Multiple Clients and Vendors

As the business environment become more uncertain and competitive, many organizations are seeking ways to gain economic efficiency and share in business and technology risk. Despite wide differences in the reference disciplines applied to outsourcing research, the vast majority of it assumes a one-to-one relationship between the client and the outsourcing vendor. This paper examines the economic, strategic, and organizational issues involved in IT outsourcing when more complex arrangements are considered - such as multi-vendor alliances, co-sourcing, and complex multi-vendor, multi-client relationships. In this paper, we identify a taxonomy of four classes of outsourcing relationships (based on how many clients and vendors are involved in the outsourcing relationship, and illustrate each with recent business examples. Grounded in this taxonomy, we develop a theoretical framework that identifies both enabling and constraining forces that may influence client firms in choosing among the four types of outsourcing relationships. This paper provides insights regarding how the variations in the nature of these outsourcing relationships may shape the benefits and risks be achieved from outsourcing, as well as the ongoing complexity of managing outsourcing relationships.Information Systems Working Papers Serie

An Empirical Analysis of Consumption Patterns for Mobile Apps and Web: A Multiple Discrete-Continuous Extreme Value Approach

Using a unique panel data set detailing individual-level mobile app consumption, this study develops a utility theory-based structural model for multiple discrete/continuous choices in app use. We identify the dynamics and inter-dependencies between mobile apps and jointly quantify consumers’ app choice and satiation simultaneously. The results suggest that mobile users’ baseline utility is the highest for communication apps, while the lowest for personal financing apps. In addition, users’ satiation level is the highest for the personal financing apps and the lowest for the game apps. However, a substantial heterogeneity in baseline utility and satiation is observed across diverse users. Furthermore, both positive and negative correlations exist in the baseline utility and satiation levels of mobile web and app categories. Consequently, the proposed frameworks could open new perspectives for handling large-scale, micro-level data, serving as important resources for big data analytics in general and mobile app analytics in particular

The Pursuit of Conversion: Effects of Mediating Channels on Product Choices and Purchase Propensities in Social Commerce Platforms

This study elucidates the effectiveness of intermediary channels in driving sales at social commerce sites (SCSs). Using a panel data, we investigate how the external intermediary channels through which consumers arrive at SCSs influence product choice and purchase likelihood. In addition, we scrutinize the extent to which product categories with varying quality moderate the relationship between consumers’ channel-related behaviors and purchase propensities. Furthermore, we examine how external channels “collaborate” with internal channels to increase purchase likelihood. The findings suggest that consumers who enter the SCS through direct apps and portals engage in more proactive purchasing than do consumers landing at the SCS via metasites or e-mail promotions. Consumers who are directed to the SCS through metasites or e-mail promotions are more likely to purchase experience goods than search goods. Contrary to previous findings, consumers’ purchasing propensities decline, rather than increase, across all channels after the implementation of a recommendation system

One-Sided Competition in Two-Sided Social Platform Markets? An Organizational Ecology Perspective

Similar to love, competition can often be unrequited. This study explores the asymmetric pattern of competition driven by membership overlap in two-sided mobile social apps (MSAs) markets. Building on the niche-width dynamics framework, we theorize and validate the relative prevalence and survival capabilities of messaging apps and SNS apps, especially when membership overlap fosters current or potential competition between the two app categories. The analyses—based on panel dataset consisting of information on 8,483 panel members’ exact amount of time used for 21 mobile social apps—show that competition between SNS and messaging apps can be asymmetric in favor of messaging apps. This asymmetric pattern is more pronounced for membership-based competition compared to usage-based competition. In addition, different MSAs developed by same platform providers exhibit synergistic effects, rather than destructive consequences, on each other’s growth. The findings identify the complex nature of competition within-category and between-category competition in MSAs markets

Nature or Nurture? An Analysis of Rational Addiction to Mobile Social Applications

Through the lens of rational addiction theory (Becker and Murphy, 1988), this study investigates whether addiction to mobile social apps should be viewed as a rational behavior rather than an uncontrollable, irrational disorder. To derive the analytical model, this study extends the rational addiction framework to include a utility-level network effect as the key factor that regulates the inter-temporal consumption of mobile social apps. Further, to validate empirically the rational addiction model in this context, we gathered and analyzed longitudinal panel data on the weekly app usage of thousands of smartphone users. The findings suggest that consistent with the rational addiction theory, users of mobile social apps are rational and forward-looking. They determine their current consumption based on both past and future consumption and the utility derived from network effects. However, the extent of rational addiction to mobile social apps varies considerably across diverse demographic groups and app categories

The Economics of All-You-Can-Read Pricing: Tariff Choice, Contract Renewal, and Switching for E-Book Purchases

E-book markets are currently moving through a period of disequilibrium as new pricing structures (i.e., flat-fee subscriptions) are rapidly embraced by major vendors. On the basis of a novel dataset, we investigate how the availability of “all-you-can-read” pricing programs influences consumers’ tariff choice, contract renewal, and switching behaviors. Consistent with the rational choice framework, the findings suggest that most e-book consumers significantly gain from subscription-based tariffs. However, we also find some other intriguing results. Among the three subscription designs examined, the 1-week plan affords consumers more economic benefits than do 1-day or 1-month programs. The economic gains derived from subscription-based tariffs diminish as consumers renew their subscriptions under the same contract duration. Consumers who switch to other plans also suffer from reduced savings. Finally, iOS users are more inclined to select subscription models than are Android users because of the absence of in-app purchase functionalities for the former