Journal of Management Information Systems

Volume 21 Number 1 2004 pp. 11-16

Special Section: Measuring Business Value of Information Technology in E-Business Environments

Mahmood, M Adam, Kohli, Rajiv, and Devaraj, Sarv

M. Adam Mahmood is a Professor of Computer Information Systems in the Department of Information and Decision Sciences at the University of Texas at El Paso. He also holds the Ellis and Susan Mayfield Professorship in the College of Business Administration. He was a visiting faculty at the Helsinki School of Economics and Business Administration in Finland and a visiting Erskine Scholar at the University of Canterbury in New Zealand. He received his Ph.D. in Management Information Systems at Texas Tech University. Dr. Mahmood’s research interest centers on economics of information systems, electronic commerce, strategic and competitive information systems, group decision support systems, and organizational and end-user computing. On this topic and others, he has published over 85 technical research papers in some of the leading journals and conference proceedings, including the Journal of Management Information Systems, MIS Quarterly, Decision Sciences, European Journal of Information Systems, INFOR—Canadian Journal of Operation Research and Information Processing, Information and Management, Journal of Organizational and End User Computing, Data Base, and others. He has also presented papers in a number of regional, national, and international conferences. Dr. Mahmood presently serves as the editor of the Journal of Organizational and End User Computing. As a Governor’s appointee, he also serves as a member of the Texas Department of Information Resources Board of Directors. He has served as a guest editor of the Journal of Management Information Systems and the International Journal of Electronic Commerce. He has also served as president of the Information Resources Management Association.

Rajiv Kohli is an Assistant Professor of Management at the University of Notre Dame. He received his Ph.D. from the University of Maryland, Baltimore County campus. He has consulted with IBM Global Services, SAS Corporation, UPS, MCI Telecommunications, among others, including several health-care organizations. Prior to joining academia in 2001, he worked for Trinity Health, where he led the strategic planning for e-business initiatives. Dr. Kohli’s research has been published in Management Science, Journal of Management Information Systems, Information Systems Research, Communications of the ACM, and Decision Support Systems, among other journals. He is a coauthor of the book IT Payoff: Measuring Business Value of Information Technology Investment (Financial Times Prentice Hall).

Sarv Devaraj is an Associate Professor at the University of Notre Dame. He received his Ph.D. from the University of Minnesota. He has consulted with several companies, including Honeywell, Trinity Health, and Infosys Technologies. His research areas include information technology payoff, technology acceptance, electronic commerce, service quality, and productivity management. His research has been published in Management Science, Journal of Management Information Systems, Information Systems Research, Decision Support Systems, Decision Sciences, Communications of the ACM, IEEE Transactions, Journal of Operations Management, and other journals. He is the coauthor of a book recently published by Prentice Hall/Financial Times on IT payoff. His research work has won “Best Paper” awards at several international conferences.

E-commerce, or the use of the Internet and the Web to conduct business, is typically categorized into business-to-consumer (B2C), business-to-business (B2B), and intraorganizational e-business. Businesses, governments, and nonprofit organizations are increasingly investing in information technology (IT) infrastructures to be able to conduct digitally enabled transactions. Online shoppers, constituting the B2C segment, spent a record $18.5 billion during the 2003 holiday season, according to Nielsen/NetRatings, representing a 35 percent increase from 2002 [6]. All indications are that e-commerce will continue to grow in the coming years.

While we have witnessed promising growth in the B2C area, there is a tremendous opportunity for generating business value from B2B e-commerce. Moreover, a few traditional businesses, such as Barnes & Noble, Dell, and Wal-Mart, have been successful in integrating e-commerce into their traditional bricks-and-mortar business models. However, many other companies still struggle with implementing and justifying e-commerce initiatives [2]. Managers primarily worry about falling behind in the implementation of e-commerce initiatives, yet the business value of these initiatives needs justification. The evidence on both the success and failure of such initiatives has been generally anecdotal. This calls for rigorous empirical research examining the payoff realized from e-commerce initiatives.

There is a rich body of literature on the business value of IT investment in traditional bricks-and-mortar business environments [1, 2, 4, 11]. However, these studies have been conducted in different contexts, at various levels of analysis, and have examined various metrics of business value [3, 5, 7, 8, 9, 10, 12]. Although the insights provided by this body of work in the context of the traditional business environment have been invaluable, they fall far short of furnishing an adequate answer to the question of whether an IT investment generates business value in the new Net-enabled business environment. This is especially complicated by the fact that the Net-enabled environment, which harnesses the power of the Internet and Web-based technologies, challenges some of the traditional frameworks, models, and metrics. Thus, there is a need to examine theories, frameworks, and metrics in the e-business environment. Even as businesses hasten to make their operations e-business enabled, the fundamental question that is often unanswered is—how does this initiative provide business value?

The four research papers included in this JMIS Special Section represent contributions from some of the prominent researchers in the business value of e-commerce area. These papers were selected from a large number of submissions following a rigorous review process by expert reviewers in the discipline. They reflect an important milestone in the examination of e-business value.

Leading off this Special Section is a paper by Zhu, Kraemer, Xu, and Dedrick. The authors, drawing on a technology–organization–environment framework, present a research model for assessing the business value of e-business initiatives at the firm level. Using survey data from 612 companies in the financial industry across 10 countries, the authors test a number of hypotheses. Their results provide us with a number of interesting findings. First, technology readiness is the strongest factor that contributes to e-business value, while financial resources, global scope, and regulatory environment also contribute significantly. Second, firm size is negatively related to e-business value. Third, e-business value is associated more with internal organizational resources such as technological readiness as opposed to competitive pressure from outside. Fourth, for launching an e-business, financial resources and government regulations are more important in developing countries, while technological capabilities are much more important in developed countries. The authors provide thoughtful recommendations for managers and policy-makers to help them launch and manage an e-business.

Dehning, Richardson, Urbaczewski, and Wells use an event study method to reexamine the value relevance of e-commerce announcements. They find evidence to support the notion that the traditional event study method, during periods of high market volatility, does not provide an accurate measure of abnormal returns. They propose an alternative method that takes into account extreme or unusual market movements in the period in which the e-commerce announcement is made. They show that their alternative method allows them to more accurately measure the change in a leading indicator (e.g., equity price) that is directly related to an individual event (e.g., e-commerce announcement). The authors claim that their technique gives researchers and investors a better tool for measuring e-business value during conditions of high industry and market volatility.

Straub, Rai, and Klein argue that since, in recent years, the economy seems to be shifting to a networked organizational model, and firms are increasingly outsourcing functions and services and partnering with suppliers and intermediaries, it is critical to measure the performance of entire networks of firms, as opposed to measuring the performance of just individual firms. The authors then explore several dimensions of networked organizational performance as a construct within a nomology and as a set of measures. They offer numbered, tiered, and layered perspectives to networked interorganizational exchanges in a digital supply network. They validate measures for a dyadic view of network performance. Their present research in this area offers a way to gather crucial information about how partners work together in sharing strategic information and about how performance across an entire network can be measured and thereby improved.

Kohli, Devaraj, and Mahmood examine the impact of Simon’s decision-making stages on consumers’ decision-making in B2C online shopping using 134 online consumers. The online channel providers continue to explore innovative ways to anticipate consumers’ need for an efficient shopping experience. By extending Simon’s decision-making model to include cost savings, time savings, and consumers’ satisfaction with the online channel, the authors examine support for the revised model. They use a structural equation modeling approach to analyze their data. Their results indicate that the online shopping channel supported the overall decision-making process of B2C consumers. In particular, the authors found strong support for the design and choice phases of online consumers’ decision-making process. The results also indicate that the support for the decision-making process was mediated by the cost savings and time savings gained by the online consumers and led to the greater satisfaction of the online channel.

Collectively, the four papers included in this Special Section exemplify the challenges in the e-business environment and the application of new frameworks, metrics, and methods needed to address these in the contexts examined. Two of these studies examine the business value of e-business initiatives at the firm level. One examines the financial services industry (Zhu, Kraemer, Xu, and Dedrick) and the other reexamines the value relevance of e-commerce announcements using an alternative event study methodology (Dehning, Richardson, Urbaczewski, and Wells). While Straub, Rai, and Klein present metrics and analyses that can be employed to assess performance and value in digital supply networks, Kohli, Devaraj, and Mahmood show that value, from the online consumer’s perspective, can be examined using an established decision-making model. In summary, these four papers present diverse perspectives on the business value of IT in e-business environments while providing valuable managerial implications. The Special Issue of the International Journal of Electronic Commerce, to appear as the fall 2004 issue, will be a continuation of this Special Section. Collectively, these investigations will help spur further research in the area.

Acknowledgments: We wish to recognize the contributions of the reviewers and associate editors to the JMIS Special Section and IJEC Special Issue for diligently reviewing and critiquing the submitted manuscripts, sometimes several versions of the same manuscripts. Their professionalism in moving this project to completion in a timely manner is truly appreciated. Our sincere thanks also goes to the authors for being highly responsive to the review team’s comments and promptly meeting the deadlines imposed on them. They made outstanding contributions to these publications.

All manuscripts were reviewed by at least three reviewers, an associate editor, and at least one guest editor. Each accepted manuscript went though at least two revisions. The reviewers, associate editors, and guest editors diligently evaluated the original manuscript and its subsequent revisions until the manuscript was finally accepted or rejected. For those manuscripts in which one or more guest editor was an author, a guest associate editor was appointed to independently manage the review process and make the final decision. The guest associate editor selected at least three reviewers and followed the same process as for the other manuscripts.

We express our special thanks to Hettie Houghton at the Information and Decision Sciences Department at the University of Texas at El Paso, who was instrumental in keeping the Special Issues project on track. Her effort and dedication to the project are truly appreciated.

The associate editors for the JMIS Special Section and IJEC Special Issue were:

Tim Ford, University of Texas at El Paso

Guisseppi Forgionne, University of Maryland Baltimore County

Robert Josefek, University of Southern California

Albert Lederer, University of Kentucky

Sophie Lee, California State University, Long Beach

Moez Limayem, City University of Hong Kong

Roger McHaney, Kansas State University

Lance Revenaugh, Cedarville University

Nilesh Saraf, Florida Atlantic University

Thomas Stafford, University of Memphis

Andrew Urbaczewski, University of Michigan–Dearborn

The reviewers for the JMIS Special Section and IJEC Special Issue were:

Vijay Agarwal, University of Nebraska at Kearney

Michel Benaroch, Syracuse University

Janice Burn, Edith Cowan University

Terry Byrd, Auburn University

Jeongil Choi, University of Nebraska at Lincoln

Steve Clarke, University of Hull

Melinda Cline, University of North Texas

William DeLone, American University

Amitava Dutta, George Mason University

Timothy C. Ford, University of Texas at El Paso

Guisseppi Forgionne, University of Maryland Baltimore County

Matthew Guah, Brunel University

Tor Guimaraes, Tennessee Technological University

Laura Hall, University of Texas at El Paso

Sandra Cherie Henderson, University of Texas at Arlington

Albert H. Huang, University of the Pacific

Wayne Huang, Ohio University

Jim Jawahar, Illinois State University

Robert Josefek, University of Southern California

Andrew Kakabadse, Cranfield School of Management

Chang Koh, University of North Texas

Jennifer Kreie, New Mexico State University

Stephen Kudyba, New Jersey Institute of Technology Management

Louis A. Le Blanc, Berry College

Albert Lederer, University of Kentucky

Sophie Lee, California State University at Long Beach

Choon Seong Leem, Yonsei University

Thomas Marshall, Auburn University

Roger McHaney, Kansas State University

James D. McKeen, Queen’s University

Nirup M. Menon, University of Texas at Dallas

Jo Ellen Moore, Southern Illinois University at Edwardsville

Jennifer Oetzel, American University

David Paper, Utah State University

Anne Powell, Southern Illinois University at Edwardsville

Srinivasan Raghunathan, University of Texas at Dallas

Arun Rai, Georgia State University

Chandrasekaran Ranganthan, University of Illinois at Chicago

Lance Revenaugh, Cedarville University

Nilesh Saraf, Florida Atlantic University

Judy Scott, University of Colorado at Denver

Susan Sherer, Lehigh University

Wesley Shu, San Diego State University

Mikko Siponen, University of Oulu

Charles Snyder, Auburn University


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