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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 |
Issue Date: | Dec-2017 | Source: | Information systems research, Dec. 2017, v. 28, no. 4, p. 850-862 | 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. | Keywords: | Concentrated ownership Deviation firm performance IT investment Overinvestment Red queen Underinvestment |
Publisher: | INFORMS Inst.for Operations Res.and the Management Sciences | Journal: | Information systems research | ISSN: | 1047-7047 | EISSN: | 1526-5536 | DOI: | 10.1287/isre.2017.0710 | Rights: | Copyright:© 2017 INFORMS This is the accepted manuscript of the following article: Ho, J., Tian, F., Wu, A., & Xu, S. X. (2017). Seeking value through deviation? Economic impacts of IT overinvestment and underinvestment. Information Systems Research, 28(4), 850-862, which has been published in final form at https://doi.org/10.1287/isre.2017.0710. |
| Appears in Collections: | Journal/Magazine Article |
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