Privacy is a significant concern of customers in the business-to-consumer online environment. Several technical, economic, and regulatory mechanisms have been proposed to address online privacy. A current market-based mechanism is the privacy seal, under which a third party assures adherence by a vendor to its posted privacy policy. In this paper, we present empirical evidence of the effect of displaying a privacy seal on the product prices of online vendors of electronic books, downloadable audiobooks, and textbooks. Using data collected on these relatively homogeneous products sold by online vendors, we find that while controlling for vendor-specific characteristics, vendors bearing privacy seals charge a premium for such products compared to vendors not bearing a seal. The paper provides empirical evidence of the economic value of privacy assurance from the customers' perspective as measured by the price premium charged for products. The research has implications for researchers and policymakers by providing evidence that privacy is another factor that creates friction in e-commerce, and that prices on the Internet for homogeneous products need not converge.
A new empirical model for the production function of the hospital incorporating two types of information systems (IS) is developed. One type of IS is representative of information technology (IT) used in primary, clinical, value-chain activities, and the other is representative of the IT used in support (administrative) value-chain activities. The model innovation is that it accommodates up to a seven-year lag for each type of IS. The output variables for the production function are hospital output and medical labor productivity. Using data spanning from 1979 to 2006 from several hospitals, it was found that clinical IS improve hospital output in the short run (of two years). Administrative IS were found to be negatively associated with organizational performance in the short run, but positively associated with these performance measures over the long run (over four years). These results highlight the importance of timing IT investments and the sequencing chosen for the implementation of IS presenting various value-chain activities, and the resulting pattern of business value over time. Differential lag length of the types of IS is to be considered in estimating the rate of return of new IT projects.
This research paper analyzes the impact of information technology (IT) in a healthcare setting using a longitudinal sample of hospital data from 1976 to 1994. We classify production inputs into labor and capital categories. Capital is classified into three components-medical IT capital, medical capital, and IT capital-and labor is classified into two components, medical labor and IT labor. Results provide evidence that IT contributes positively to the production of services in the healthcare industry.
The influence of information technology (IT) investments on organizational performance is revisited. Bounded rationality, organizational controls, and political forces may constrain optimal selection of inputs and appropriate substitution between inputs. For example, firms may not be able to attain an optimal level of IT by substituting IT for labor (for reasons such as pressure from the labor union). Besides estimating a link between IT investments and firm output, this paper presents a study of the link between IT investment levels and the efficiency of processes.