Year: 1999
Type: article
Abstract: Empirical research on the contribution of Information Technology (IT) to firm performance has yielded contradictory and inconclusive findings, thus fueling the debate on the existence of a productivity paradox.Many of these studies used firm-level output, which while useful, provides only a limited understanding of the dynamic process behind the creation, and therefore, the measurement of IT business value.Process-oriented research has been proposed as a possible solution to this predicament.From an organizational perspective, the value chain is seen as an effective mechanism for modeling the value creation process.For the purposes of creating or enhancing value, management allocate resources, including technological resources, to those processes comprising the value chain.Using this notion, we develop a value-based model of IT business value derived from the impact of IT on processes and inter-process linkages within the value chain.The adoption of a value chain typology allows us to consider two fundamental questions.Firstly, can process-level impacts be used to measure IT business value?Secondly, if process-level impacts are deemed appropriate, can we apply a calibration scale to these processes that will allow us to determine the level of IT business value within an organization?In effect, our ultimate goal is to develop, and calibrate a thermometer of IT business value.Data for our study was based on survey data from 180 senior executives.Respondents were asked to rate the extent to which IT had contributed to firm performance across a variety of dimensions corresponding to distinct processes along the value chain.Structural equation modeling was then used to provide a formal test of the model.Our findings confirm that perceptual ratings of process-level impacts can be used to measure IT business value.Furthermore, our model reveals how process-level impacts can be calibrated to reveal a measure of IT business value at the organizational level.
Institution: University of California, Irvine
Language: English
Subfield: Management Information Systems
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W2136753785