An economic analysis of strategic information technology investments
MIS Quarterly - Special issue on the strategic use of information systems
The productivity paradox of information technology
Communications of the ACM
Productivity and information technology: the elusive connection
Management Science
International dimensions of the productivity paradox
Communications of the ACM
Information technology impact on process output and quality
Management Science - Special issue: Frontier research on information systems and economics
Research Report: Increasing Returns to Information Technology
Information Systems Research
Journal of Management Information Systems
Investment in Enterprise Resource Planning: Business Impact and Productivity Measures
Journal of Management Information Systems
An Empirical Study of the Casual Relationship Between IT Investment and Firm Performance
Information Resources Management Journal
Journal of Management Information Systems
Information Technology Investment Strategies Under Declining Technology Cost
Journal of Management Information Systems
Information Technology, Production Process Outsourcing, and Manufacturing Plant Performance
Journal of Management Information Systems
Information Processing Design Choices, Strategy, and Risk Management Performance
Journal of Management Information Systems
Detecting information technology impact on firm performance using DEA and decision tree
International Journal of Information Technology and Management
Evaluating Internet technologies business effectiveness
Telematics and Informatics
Technical efficiency and use of information and communication technology in Spanish firms
Telecommunications Policy
ERP ISV investment analysis under fuzzy decision environment
FSKD'09 Proceedings of the 6th international conference on Fuzzy systems and knowledge discovery - Volume 3
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Over the past two decades, numerous empirical studies have been conducted on the contribution of information technology (IT) to productivity and other measures of firm performance. However, few theoretical studies have attempted to explain the contingencies under which IT investments may or may not be valuable to a firm in a competitive market. This research proposes a duopoly competition model to study the impacts of IT investments on firm performance and productivity. We show that the extent to which a profit-maximizing firm benefits from IT investments is a function of, among other things, market sensitivities to the price and quality of the products and services offered by the firm and its competitor. We demonstrate that, under duopolistic competition, the effects of IT investments are not as deterministic as under monopolistic competition. We further show that the effect of IT investments on productivity, in a duopoly market, are contingent on market sensitivities to changes in the price and quality of products and services offered by the firm and its competitor, as well as on fixed and overhead costs being sufficiently large in relation to market size--an important condition in a monopoly market. Especially, the price sensitivity has a positive effect on the impact of IT investments on productivity and quality sensitivity has a negative effect. We submit that firms are better off making efficiency-enhancing IT investments if the market in which they operate is more price sensitive than quality sensitive.