Premium
Environmental Factors, Managerial Processes, and Information Technology Investment Strategies
Author(s) -
Ravichandran T.,
Liu Yu
Publication year - 2011
Publication title -
decision sciences
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.238
H-Index - 108
eISSN - 1540-5915
pISSN - 0011-7315
DOI - 10.1111/j.1540-5915.2011.00323.x
Subject(s) - investment strategy , business , conceptualization , industrial organization , investment (military) , strategic management , strategic planning , marketing , economics , microeconomics , profit (economics) , artificial intelligence , politics , computer science , political science , law
Although significant research attention has been directed at understanding the value of information technology (IT) investments for firms, very little attention has been paid to understand the IT investment behavior of firms. This article seeks to fill this void. We introduce the concept of IT investment strategy, defined by dimensions of intensity and proactiveness, to characterize the IT investment behavior of firms. Synthesizing the environmental deterministic and strategic choice perspectives of a firm's strategic decision making, we examine the effects of environmental factors, managerial processes, and the interplay between them on IT investment strategy. Specifically, we examine the impact of environmental factors such as industry clockspeed and information intensity on IT investment strategy. We also incorporate the strategic choice perspective to argue that managerial processes such as frequent chief executive officer—chief information officer communications and collective information systems planning play a critical role in shaping the firm's IT investment strategy. The empirical results show that the environmental variables are related to IT investment strategy. Besides, managerial processes serve as a means to understand the environment and thus moderate the relationships between the environmental variables and the various facets of IT investment strategy. The conceptualization of IT investment strategy and the focus on both environmental determinism and strategic choice should enrich our understanding of firms’ IT investing behavior.