Paradise Delayed: The Impacts of IT on Performance and Workers

The purpose of this paper is to present and empirically test a typology of ITs and direct labor practices that provide insight into how each individually affects manufacturing performance, and how the two interact in a highly dynamic setting. This addresses the concern of Orlikowski and Iacono (2001, pg. 121) that ìthe field of ISÖhas not deeply engaged the IT artifact [and that it continues] to be under theorized,î and their call for theoretical investigation of ìhow people engage with various technological artifacts in the course of working, learning, communicating, shopping, or entertaining themselvesî (pg. 132). The former is particularly true of research investigating ITís performance impacts, where the vast majority of studies have treated the internal operation of the firm as a black box

Information Technology and the Volatility of Firm Performance

This study investigates the impact of IT investments and several contextual variables on the volatility of future earnings. We find evidence that IT investments strongly increases the volatility of future earnings and that four contextual factors - industry concentration, sales growth, diversification, and leverage - strongly moderate IT's effect on earnings volatility. It is notable that while the main effect of IT spending on earnings volatility is strongly positive, not all of the moderators are. This suggests that there are conditions under which the positive risk-return relation can be either offset or even reversed. Taken together, these results suggest an explanation for what has recently been termed the "new productivity paradox", i.e. the apparent under-investment in information technology despite evidence of highly positive returns for doing so

Determinants of Budgeted Information Technology Expenditures

Information technology expenditures vary across firms and across industries; however, very little empirical research has investigated the factors influencing the level of these expenditures. The object of this paper is to present theory and evidence of the determinants of corporate IT budgets. Using InformationWeek data, we find that budgeted IT expenditures are significantly influenced by the strategic role that IT plays in an industry, and by the level of complexity arising from industry and firm-level factors. The level of concentration within the industry has a significant impact on IT budgets. A number of firm-level factors also affect IT budgets, including prior IT investments, resource availability, business volatility, and the level of diversification. This suggests that managers should adjust for these firm and industry-level factors when comparing their IT spending to selected benchmark firms

The Impact Of Different Uses Of Information Technology On Business Processes And Performance: An Active Learning Exercise

Information technology (IT) spending now accounts for 23% of private non-resident investment, totaling $305 billion and nearly equaling the investments in structures and outstripping all other categories. Notwithstanding IT’s importance the study of how different uses of IT have varying impacts on organizational processes and performance is the focus of few teaching materials. Since most students lack work experience, having students fully appreciate the nature and performance impacts of different uses of IT is challenging. To address this, we propose using the Aero-BAK Inc. simulation as a single class period active learning exercise. In the simulation students experience how the impacts of technologies that enhance communication and analysis capabilities (a surrogate for investment in informating IT) are different from those that perform physical tasks via a “robot” (a surrogate for automating IT). This helps students make more informed IT capital budgeting decisions. The exercise can be used in an introductory AIS, MIS, or operations management course, and with any textbook

Enterprise Information Systems Capability and GHG Pollution Emissions Reductions

This paper adds to IT sustainability literature by empirically examining the degree to which enterprise information systems capability impacts organizational greenhouse gas emissions (GHG). We accomplish this by analyzing a unique data set combining surveys of corporate IT, GHG emissions and environmental practices with other secondary sources that contain financial and environmental metrics. We find that high levels of Enterprise Support IS Capability combined with the adoption of firm GHG pollution reduction targets help to reduce firm GHG emissions. On the other hand, the adoption of reduction targets in less IS-capable firms is associated with higher emissions. Our research highlights the role of information technology in firm sustainability programs and the value of information to pollution reduction

The Impact Of Performance-Based CEO And CFO Compensation On Internal Control Quality

We examine the effects of compensation on the quality of internal control and provide the first evidence relating the time horizon of ex ante performance-based compensation incentives and internal control quality over financial reporting in the SOX 404 era. Specifically, we find that for CEOs and CFOs, the sensitivity of the option portfolio to stock price changes and the proportion of compensation received from long-term incentive plans are related to the propensity to report internal control weaknesses during the period 2004-2006. These effects are negative for long-term incentives but positive or insignificant for short-term incentives for both CEOs and CFOs, who have the primary responsibility for the financial reporting process. Compensation sensitivity is also more strongly related to more severe company-level than account-specific control weaknesses. This company-level weakness relation is stronger for the CFO, who has the primary responsibility for the processes generating financial information and for the financial reporting by the firm. Our findings indicate that SOX disclosures harness the power of compensation schemes to improve internal control quality

An examination of the long-term business value of investments in information technology

In this paper, we examine the effects of investments in Information Technology (IT) on the long term business values of organizations. The regression discontinuity design is used in this research to examine eight hundred and ten IT investment announcements collected from the period 1982–2007. Our results found that press releases can affect the market value of a firm by possibly providing investors with a better idea of a firm’s current and future operations and strategy. On the other hand, these press releases also appear to attract more transient investors. The attraction of transient investors likely suggests the market believes the IT investing firm is serious about its potential for growth and expansion

The Impact of Information Technologies and World Class Manufacturing Practices on Managerial Control

This study investigates the relationship between the use of specificinformation technologies and team-oriented practices and six measures of shop-floor control in a manufacturing setting. We investigate how use of 3 different types of ITs used in high tech manufacturing (product tracking, process automation, inter-firm ITlinkages) are correlated with use of 3 types of world class manufacturing practices (process review and control, continuous improvement, and JIT), and how these patterns of use are associated with two very different managerial approaches to controlling workers. One is traditional, emphasizing top-down monitoring and pay-based rewards, the other participative, emphasizing social needs and team based work structures. Hypotheses linking technologies and practices to the specific control mechanisms underlying these two views are developed using control theory, agency theory, and concertive control theory. These hypotheses are empirically tested using data from a survey of manufacturing plants in the highly dynamic and competitive disk drive industry.Our resultsindicate that both views are used in practice, though we find that technologies and practices are associated with quite different patterns of control. Product tracking technologies\u27 are associated with a top-down, managerial command and control approach which is best explained by agency theory supplemented with a recognition of the social implications of performance measurement which provide a basis for peer pressure. Inter-firm IT linkages and practices\u27 relationship to control are associated with a more participatory team-based approach

Information technology, contextual factors and the volatility of firm performance

This study uses previous theory developed in the IT implementation literature and the information processing view of the firm to empirically investigate the impact of IT investments and several contextual variables on the volatility of future earnings. We useInformationWeek 500 data on IT spending from 1992–1997 to find evidence that IT investments increase the volatility of future earnings but that this impact is highly contingent upon three firm level contextual factors — sales growth, unrelated diversification, and size. These factors can lead to conditions in which IT increases or reduces earnings volatility. Taken together, these results may help explain what has recently been termed the “new productivity paradox,” i.e., the apparent under-investment in information technology despite evidence of highly positive returns for doing so, and suggests settings where managers may be under- or over-discounting returns on IT investments.</p