Analyzing Cost-Effectiveness of Organizations: The Impact of Information Technology Spending.

Author List: Mitra, Sabyasachi; Chayam, Antoine Karim;
Journal of Management Information Systems, 1996, Volume 13, Issue 2, Page 29-57.
The performance impacts of information technology (IT) investments in organizations have received considerable attention in recent years. In this research, we investigate the cost factors that are affected by such investments. We analyze a data set containing the information technology budgets of over 400 large and medium-sized U.S. corporations. We find that higher IT investments are associated with lower average production costs, lower average total costs, and higher average overhead costs. We also find that larger companies spend more on information technology as a percentage of their revenues than smaller companies. We do not find any evidence that information technology reduces labor costs in organizations. We explain our findings, which are often counterintuitive but interesting, using basic microeconomic theory of the firm.
Keywords: business value of information technology;impact of information technology;information technology investment;information technology payoff
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#271 0.352 technology investments investment information firm firms profitability value performance impact data higher evidence diversification industry payoff return findings decisions greater
#151 0.186 costs cost switching reduce transaction increase benefits time economic production transactions savings reduction impact services reduced affect expected optimal associated
#182 0.140 percent sales average economic growth increasing total using number million percentage evidence analyze approximately does business flow annual book daily
#26 0.090 business large organizations using work changing rapidly make today's available designed need increasingly recent manage years activity important allow achieve
#1 0.081 organizational organizations effectiveness factors managers model associated context characteristics variables paper relationships level attention environmental technological based maturity organization's relationship
#243 0.060 states united employment compensation labor workers paper work extent findings increasing implications concerns relationship managerial wage options offer salary entry