Please use this identifier to cite or link to this item: http://hdl.handle.net/10397/75038
Title: Seeking value through deviation? Economic impacts of it overinvestment and underinvestment
Authors: Ho, J
Tian, F 
Wu, A
Xu, SX
Keywords: Concentrated ownership
Deviation
firm performance
IT investment
Overinvestment
Red queen
Underinvestment
Issue Date: 2017
Publisher: INFORMS Inst.for Operations Res.and the Management Sciences
Source: Information systems research, 2017, v. 28, no. 4, p. 850-862 How to cite?
Journal: Information systems research 
Abstract: This study addresses the economic impacts of information technology (IT) overinvestment and underinvestment decisions. Based on the view of Red Queen competition in conjunction with institutional theory, we hypothesize that overinvestment and underinvestment in IT have nonlinear performance impacts. Drawing on the idea of management control mechanisms, we further hypothesize that the performance impacts are conditional on ownership concentration. Using a sample of S&P 500 firms, we find that, on average, there is a positive relationship between a firm's overinvestment in IT and Tobin's q, although that relationship attenuates at higher levels of overinvestment. However, there is, on average, no relationship between a firm's underinvestment in IT and its Tobin's q. Importantly, the payoff for underinvestment becomes positive for companies with founding-family ownership. Implications for research and practice are discussed.
URI: http://hdl.handle.net/10397/75038
ISSN: 1047-7047
EISSN: 1526-5536
DOI: 10.1287/isre.2017.0710
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