Information technology value through different normative lenses

The influence of 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. Nonparametric and parametric techniques were applied to financial data on hospitals collected over a period of eighteen years. We found that cost and technical and allocative efficiencies are statistically significant in the production framework. We also found that hospitals that were characterized by high technical efficiency also used a greater amount of IT capital than firms that exhibited low technical efficiency. A group of hospitals exhibiting high technical efficiency also exhibited low allocative efficiency, indicating that, while processes may have been efficient, resource allocation and budgeting between various categories of capital and labor have not been efficient. Our results also differ from previously published results because we find that IT labor had a negative contribution to productivity and that non-IT capital had a greater contribution to productivity than IT capital.
Publisher
M E SHARPE INC
Issue Date
2000-03
Language
ENG
Keywords

DATA ENVELOPMENT ANALYSIS; MEASURING PRODUCTION EFFICIENCY

Citation

JOURNAL OF MANAGEMENT INFORMATION SYSTEMS, v.16, no.4, pp.99 - 119

ISSN
0742-1222
URI
http://hdl.handle.net/10203/4727
Appears in Collection
MT-Journal Papers(저널논문)
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