Information technology and business transformation : work location and the allocation of decision rights
(cont.) as well, firms have an incentive to require coordinated investments in technology across the enterprise. Still, research in IS has also highlighted the fact that the productivity of computer investments is highly dependent on co-investment in complementary assets (for instance, tacit knowledge and specialized work processes). Many of these additional investments are intangible and highly dependent on the local expertise and the knowledge of the branch or division. When local knowledge is important, the uninformed headquarters have an incentive to delegate decision rights to the local branch. I develop a mathematical model to analyze this tradeoff and derive testable hypotheses that relate IT investment diversity and the allocation of decision rights. Decentralization leads to less uniform IT investments and is more likely the less vertically integrated the firm is. I also provide some empirical support for these hypotheses using a large dataset of firms' IT investments and allocation of purchasing decision rights.
Year of publication: |
2004
|
---|---|
Authors: | Fitoussi, David |
Other Persons: | Eric Brynjolfsson. (contributor) |
Institutions: | Sloan School of Management (contributor) |
Publisher: |
Massachusetts Institute of Technology |
Subject: | Sloan School of Management |
Saved in:
freely available
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