Information Technology and Administrative Efficiency in U.S. State Governments: A Stochastic Frontier Approach

Author List: Pang, Min-Seok; Tafti, Ali; Krishnan, M. S.;
MIS Quarterly, 2014, Volume 38, Issue 4, Page 1079-1101.
This paper explores value creation from government use of information technologies (IT). While the majority of studies in the information systems (IS) discipline have focused on discovering IT business value in for-profit organizations, the performance effects of IT in the public sector have not been extensively studied in either the IS or the public administration literature. We examine whether IT improves administrative efficiency in U.S. state governments. Utilizing IT budget data in state governments, the census data on state government expenditures, and a variety of information on public services that states provide, we measure technical efficiency with a stochastic frontier analysis and a translog cost function and estimate the effect of IT spending on efficiency. Our analyses provide evidence for a positive relationship between IT spending and cost efficiency and indicate that, on average, a $1 increase in per capita IT budget is associated with $1.13 in efficiency gains. This study contributes to the IS literature by expanding the scope of IT value research to public sector organizations and provides meaningful implications for elected officials and public sector managers.
Keywords: IT value; public sector; U.S. state governments; stochastic frontier analysis; translog cost function
Algorithm:

List of Topics

#79 0.318 public government private sector state policy political citizens governments contributors agencies issues forums mass development organizations issue differences economic study
#93 0.220 performance results study impact research influence effects data higher efficiency effect significantly findings impacts empirical significant suggest outcomes better positive
#143 0.115 value business benefits technology based economic creation related intangible cocreation assessing financial improved key economics assess question created create understanding
#285 0.111 effects effect research data studies empirical information literature different interaction analysis implications findings results important set large provide using paper
#77 0.088 information systems paper use design case important used context provide presented authors concepts order number various underlying implementation framework nature
#151 0.060 costs cost switching reduce transaction increase benefits time economic production transactions savings reduction impact services reduced affect expected optimal associated
#27 0.050 secondary use primary data outcomes objective ways analysis range addresses development purpose budget past outcome wide direct generating occurs desired