3 essays in the economics of information technology

Abstract

Thesis (Ph. D.)--Massachusetts Institute of Technology, Sloan School of Management, 2013.Cataloged from PDF version of thesis.Includes bibliographical references.The first chapter is to investigate the impact of a free on-line repository of research articles on the diffusion of their ideas measured by the citation counts. The key questions that this chapter answers are as following: 1) does a free on-line repository of research articles increase the diffusion of their scholarly ideas measured by their citations?; 2) who benefits from the free access? By using a dataset from the Social Science Research Network (SSRN), an open repository of research articles, and employing a natural experiment that allows the effect of free access separate from other confounding factors, this study identifies the causal effect of free access on the citation counts as well as shows a heterogeneous effect of free access on both supply and demand side. The second chapter is to study the correlation between CEO pay and information technology. The hypothesis is that IT increases "effective size" of the firm that a top manager controls and thus her marginal productivity. In turn, in an efficient market, the firms with a higher degree of information technology will reward their CEOs with a higher compensation. The third chapter is to examine whether firms that emphasize decision making based on data and business analytics ("data driven decision making" or DDD) show higher performance. Using detailed survey data on the business practices and information technology investments of 179 large publicly traded firms, this study finds that firms that adopt DDD have output and productivity that is 5-6% higher than what would be expected given their other investments and information technology usage. Furthermore, the relationship between DDD and performance also appears in other performance measures such as asset utilization, return on equity and market value. Using instrumental variables methods, this study finds evidence that the effect of DDD on the productivity do not appear to be due to reverse causality. These results provide some of the first large scale data on the direct connection between data-driven decision making and firm performance.by Heekyung Hellen Kim.Ph.D