An Economic Analysis of Strategic Information Technology Investments

@article{Barua1991AnEA,
  title={An Economic Analysis of Strategic Information Technology Investments},
  author={Anitesh Barua and Charles H. Kriebel and Tridas Mukhopadhyay},
  journal={MIS Q.},
  year={1991},
  volume={15},
  pages={313-331}
}
The information systems literature is replete with conceptual frameworks for analyzing strategic applications of information technology (IT). In this article, the strategic impacts of IT investment are studied through the development of a formal economic model. In particular, it focuses on IT-related quality competition in a duopoly, where the services may not be priced initially (e.g., in the financial services sector), and where the benefits may come indirectly (e.g., in the form of interest… 
Information Technology Investments and Firms' Performance--A Duopoly Perspective
TLDR
It is submitted that firms are better off making efficiency-enhancing IT investments if the market in which they operate is more price sensitive than quality sensitive, and the effect of IT investments on productivity is contingent on market sensitivities to changes in the price and quality.
Understanding the Business Value of Information Technology Investments: Theoretical Evidence from Alternative Market and Cost Structures
TLDR
The analysis reveals that together market structure and cost structure play a critical role in determining the form of the relationship between IT investment and economic measures.
Causality in the alignment of information technology and business strategy
The impact of information technology on the banking industry
TLDR
The results suggest that (at individual firm levels) the bank profits can decline due to adoption and diffusion of IT investment, reflecting negative network competition effects in this industry.
Information Technology Investment Strategies Under Declining Technology Cost
TLDR
It is shown that declining IT cost intensifies or relaxes competition between firms depending on whether they are serving quality- or price-sensitive markets and the average price per unit quality decreases when the IT cost declines.
Turmoil, Transparency, and Tea: Evaluating the Impact of it on London's Stock Exchange
Evaluating strategic investments in information technology can be difficult. Uncertainties exist in customer responses, competitor reactions, and thus in the actual economic benefits to be realized.
Information technology investment strategies: a review and synthesis of the literature
TLDR
The concept of IT investment strategy so far considered two domains: intensity and proactiveness is enhanced by adding the domain of investment focus; this concept is made an attempt to answer three strategic questions related to IT investments.
The impact of information technology on quality improvement, productivity, and profits: an analytical model of a monopolist
TLDR
The model demonstrates that a profit-maximizing firm may make a conscious decision to invest in certain technologies that lead to product quality improvements to capture higher profits, but sometimes at the expense of firm productivity.
Strategic IT Investments: Impact of Switching Cost and Declining Technology Cost
TLDR
The results show that in a market with a low (high) switching cost, a decline in IT cost reduces the investment level of the early entrant and that in both types of markets, a higher switching cost mitigates the cost advantage of the later entrant.
Information Technology Investments and Organizational Productivity and Performance: An Empirical Investigation
TLDR
In the research, covering a 3-year period and involving firm-level data for a broad cross-section of U.S. industry, positive relations between higher levels of IT investment and selected measures representing organizational performance and productivity are found.
...
...

References

SHOWING 1-10 OF 23 REFERENCES
Price, Quality and Quantity Regulation in Monopoly Situations
Economists now have at their disposal a well-developed body of analysis dealing with price and quantity behaviour in various market structures, but they have no comparable body of analysis relating
Strategic Contributions of Information Technology: An Empirical Study of Atm Networks
TLDR
The results suggest that a bank's ATM network membership decision is crucial to its later success in enhancing deposit market share viadeployment of ATMs, but it is found little evidence that branch ATMs provide any competitive leverage to increase a branch's local deposit share.
Market Structure, Quality and Durability
This paper analyzes the effects of market structure -- monopoly versus competition -- on the quality and durability of goods. Also, it tries to find the impact of government regulation on these
Strategic and non-strategic differentiation
When firms choose the characteristic of their products before output is produced, imperfectly competitive firms may use this characteristic strategically so as to reduce the output level produced by
The Theory of Industrial Organization
The Theory of Industrial Organization is the first primary text to treat the new industrial organization at the advanced-undergraduate and graduate level. Rigorously analytical and filled with
How Information Gives You Competitive Advantage
Most general managers know that the revolution is under way, and few dispute its importance. As more and more of their time and investment capital is absorbed in information technology and its
Market segmentation, cannibalization, and the timing of product introductions
Consider a seller who faces two customer segments with differing valuations of quality of a durable product. Demand is stationary and known, the technology exists to release two products
...
...