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Innovations involving information technology (IT) provide potentially valuable investment opportunities for industry and government organizations. Significant uncertainties are associated with decision-making for IT investment though, a problem that senior executives have been concerned about for a long time. The uncertainties include consumer, market and regulatory responses, IT-driven changes in operational and transactional performance, technology standards and competition, and future market conditions. All these things have an impact on organizations' willingness to adopt. As a result, traditional capital budgeting, investment experience, and intuition have not been very effective in IT investment decision-making. We propose a new option-based stochastic valuation modeling approach for IT investment under uncertainty that incorporates a mean reversion process to capture cost and benefit flow variations over time. We apply the proposed approach in two industry settings: to a large-scale IT investment in the consolidation of data marts at a major airline, and to a mobile payment system infrastructure investment on the part of a start-up. The applications supported the evaluation of the proposed methods, and offered some illustrations about the kinds of managerial insights that can be obtained. We also report on several extensions that demonstrate how the creation of useful management findings from the modeling approach can be supplemented with project value sensitivity analysis and the use of simulation-based least-squares Monte Carlo valuation. The findings are useful to assess the power and value of the approach. [ABSTRACT FROM AUTHOR]

A large number of interesting business and technology problems in IS and e-commerce research center around events and the associated variables that influence them. Researchers are often interested in studying the timing, patterns, and frequencies of events. Some of those events are related to the timing of strategic decisions such as new technology adoption, functionality upgrades to established software products, new outsourcing contracts, and the termination of failing IS projects. Still others are external events that have significant implications on the performance of firms, the structure of industries affected by IT, and the viability of various aspects of the economy. Event history methods, also known as survival analysis and duration analysis methods, spatial analysis, and count data analysis in the medical sciences, public health and biostatistics literature, offer rigorous methods for empirical analysis that can provide rich insights into research issues that arise in association with identifiable events. This article provides a current survey of these methods and in-depth discussion of how researchers can apply them to study technology adoption problems and related issues in IS and e-commerce. We offer a framework for mapping the methods to applicable problems, and discuss the relevant variants of the methods. We also illustrate the range of research questions that can be asked and answered through the use of the methods. [ABSTRACT FROM AUTHOR]

Innovations associated with information and communication technology (ICT) have opened up new opportunities for the global economy and ushered in the age of e-commerce. Our objective in this research is to explore the role of Internet-based selling technology, which acts as technology infrastructure for B2C e-commerce growth at the country level. This study proposes the use of a new hybrid growth theory approach as the theoretical basis for examining exogenous and endogenous factors that influence e-commerce growth over time. We estimate three different models to evaluate their explanatory capabilities. We investigate a panel-corrected feasible generalized least squares regression that incorporates the direct effects of country-level variables. We also specify an endogeneity-adjusted two-stage least squares model and estimate it with an embedded technology adoption function in a simultaneous equation model. This permits the analysis of the relevance of IT infrastructure, as well as reverse causality between e-commerce growth and Internet-based selling technology. We test these models using archival data for four different regions, based on either 24 or 42 countries around the world, depending on the data requirements of the models. Our empirical tests evaluate quasi-production environmental inputs, in which technology determines the environment of production of e-commerce services. Our main finding is that both endogenous variables (e.g., Internet user penetration, capital invested in telecommunication) and exogenous variables (international openness) drive the GDP-normalized level of B2C e-commerce revenues over time. A second main finding is that it is useful to include an embedded technology adoption function in a modeling specification for growth, since growth is founded on the availability of relevant IT infrastructure that is made possible by the availability of venture capital. In addition, B2C e-commerce revenue growth and venture capital also contribute to the adoption of Internet-based selling technology. We discuss our overall approach for the interpretation of the strength of our main findings, as well as the policy implications, and why our hybrid growth theory approach is useful. [ABSTRACT FROM AUTHOR]

The article discusses various papers published in this journal including one by Jonas Hedman and Gregory Gimpel on the adoption of hyped technologies and the theory of consumpion values, one by Maria Bermúdez-Edoand colleagues on trust and corporate web sites, and one by Robert J. Kauffman and colleagues on group-buying auctions.

Internet-based group-buying auctions enable consumers to obtain volume discounts, but they face risk and trust issues that are not present in other e-retailing formats, which affects their adoption by consumers. Bidders experience uncertainty about the final auction price, and the risk of whether the auction will be completed. We evaluate textual comments and the number of bids made in an auction as drivers of a consumer's perceived financial and psychological risks toward the group-buying auction mechanism and trust in the auction initiator. We use an Internet-based experimental test bed for online group-buying auctions and will report on one experiment that we conducted. Our results indicate that textual comments made by the participants about sellers in past auctions and existing bids affected a consumer's perceived trust in the auction initiator and the financial risk of the mechanism. Positive textual comments and more bids appear to enhance perceived trust in the auction initiator and reduce financial risk, and other consumers are more willing to make bids as a result. Consumers continued to express concerns about the uncertainty of the final group-buying auction price though. [ABSTRACT FROM AUTHOR]

The analysis of network effects in technology-based networks continues to be of significant managerial importance in e-commerce and traditional IS operations. Competitive strategy, economics and IS researchers share this interest, and have been exploring technology adoption, development and product launch contexts where understanding the issues is critical. This article examines settings involving countervailing and complementary network effects, which act as drivers of business value at several levels of analysis: the industry or market level, the firm or process level, the individual or product level, and the technology level. It leverages real options analysis for managerial decision-making under uncertainty across these contexts. We also identify a set of real options— compatibility, sponsorship and ownership option—which are unique to these settings, and which provide a template for managerial thinking and analysis when it is possible to delay an investment decision. We employ a hybrid jump-diffusion process to model countervailing and complementary network effects from the perspective of a user or a firm joining a network. We also do this from the perspective of a network developer. Our analysis shows that when countervailing and complementary network effects occur in the same network technology context, they give rise to real option value effects that may be used to control or modify the valuation trajectory of a network technology. The option value of waiting in these contexts jumps when the related business environment experiences shocks. Further, we find that the functional relationship between network value and the option value is not linear, and that taking into account a risk premium may not always result in a risk-neural investment. We also provide a managerial decision-making template through the different kinds of deferral options that we identify for this IT analysis context. [ABSTRACT FROM AUTHOR]

More than 5,000 Internet firms have failed since the beginning of 2000. One common perception is that the downturn in the economy drove many firms out of business. But then, why have some firms survived? In this research, we provide an empirical analysis by examining how the business model characteristics of an Internet firm affect its survival. We analyze a panel data set of 130 public Internet firms using two different techniques: non-parametric survival analysis, and the semiparametric Cox proportional hazards model. We characterize the survival rates throughout the lifetimes of the public Internet firms in our sample. Our results reveal that smaller firms that facilitate customer-provider interactions, are transaction brokers, and that rely on advertising as their primary source of revenue sources have had a lower likelihood of bankruptcy or failure. In addition, the detrimental effects on failing to serve as interaction platforms for individuals and businesses, and a larger firm size diminish over time as Internet firms mature, and the weaker ones are forced out of the marketplace. Our research also points out important dimensions of an Internet firm’s business model that affect its survival. [ABSTRACT FROM AUTHOR]

Implementation and maintenance of interorganizational systems (IOS) require investments by all the participating firms. Compared with intraorganizational systems, however, there are additional uncertainties and risks. This is because the benefits of IOS investment depend not only on a firm’s own decisions, but also on those of its business partners. Without appropriate levels of investment by all the firms participating in an IOS, they cannot reap the full benefits. Drawing upon the literature in institutional economics, we examine IOS ownership as a means to induce value-maximizing noncontractible investments. We model the impact of two factors derived from the theory of incomplete contracts and transaction cost economics: relative importance of investments and specificity of investments. We apply the model to a vendor-managed inventory system (VMI) in a supply chain setting. We show that when the specificity of investments is high, this is a more critical determinant of optimal ownership structure than the relative importance of investments. As technologies used in IOS become increasingly redeployable and reusable, and less specific, the relative importance of investments becomes a dominant factor. We also show that the bargaining mechanism—or the agreed upon approach to splitting the incremental payoffs—that is used affects the relationship between these factors in determining the optimal ownership structure of an IOS. [ABSTRACT FROM AUTHOR]

Radio frequency identification (RFID) technology dramatically increases the ability of the organization to acquire a vast array of data about the location and properties of any entity that can be physically tagged and wirelessly scanned within certain technical limitations. RFID can be applied to a variety of tasks, structures, work systems and contexts along the value chain, including business-to-business logistics, internal operations, business-to-consumer marketing, and after-sales service applications. As industry adoption of RFID increases there is an emerging interest by academic researchers to engage in scholarly investigation to understand how RFID relates to mobility, organizational and systems technologies (MOST). In this paper, we explore RFID and propose a research agenda to address a series of broad research questions related to how RFID technology: (1) is developed, adopted, and implemented by organizations; (2) is used, supported, and evolved within organizations and alliances; and (3) impacts individuals, business processes, organizations, and markets. As with many technological innovations, as the technical problems associated with implementing and using RFID are addressed and resolved, the managerial and organizational issues will emerge as critical areas for IS research. [ABSTRACT FROM AUTHOR]

We propose a new conceptual model for understanding technology evolution that highlights dynamic and highly interdependent relationships among multiple technologies. We argue that, instead of considering technologies in isolation, technology evolution is best viewed as a dynamic system or ecosystem that includes a variety of interrelated technologies. By considering the interdependent nature of technology evolution, we identify three roles that technologies play within a technology ecosystem. These roles are components, products and applications, and support and infrastructure. Technologies within an ecosystem interact through these roles and impact each others’ evolution. We also classify types of interactions between technology roles, which we term paths of influence. We demonstrate the use of our proposed model through examples of wireless networking (Wi-Fi) technologies and a business mini-case on the digital music industry. [ABSTRACT FROM AUTHOR]

Decisions to invest in information technology (IT) infrastructure are often made based on an assessment of its immediate value to the organization. However, an important source of value comes from the fact that such technologies have the potential to be leveraged in the development of future applications. From a real options perspective, IT infrastructure investments create growth options that can be exercised if and when an organization decides to develop systems to provide new or enhanced IT capabilities. We present an analytical model based on real options that shows the process by which this potential is converted into business value, and discuss middleware as an example technology in this context. We derive managerial implications for the evaluation of IT infrastructure investments, and the main findings are: (1) the flexibility provided by IT infrastructure investment is more valuable when uncertainty is higher; (2) the cost advantage that IT infrastructure investment brings about is amplified by demand volatility for IT-supported products and services; (3) in duopoly competition, the value of IT infrastructure flexibility increases with the level of product or service substitutability; and (4) when demand volatility is high, inter-firm competition has a lower impact on the value of IT infrastructure. [ABSTRACT FROM AUTHOR]

What factors make individual bidders pay more or less for the same item in online auctions? We use data on over 55,000 bids over a three-year period collected by a customized Internet software agent. These data are used to perform a within-bidders quasi-experiment, testing bidders who bid on the exact same item at different times during a 30-day period in online auctions. With theories from information systems and consumer behavior as our theoretical lens, we then examine factors that make individuals pay more for the exact same item in online auctions. We find that the same individual will tend to pay more for items sold on a weekend, for items with a picture, and for items sold by experienced sellers. We also find that the same individual is willing to pay more for the same item if others express an interest in that item, exhibiting a type of herd effect. Our results are generalizable to other auctions, and shed light on electronic commerce sales in general, where firms try to sell products for the highest possible price. [ABSTRACT FROM AUTHOR]

E-procurement systems are computer systems and communication networks through which firms buy and sell products. We identify two types of e-procurement systems: extranets and e-markets. Extranets connect the buyer and its suppliers with a closed network, while e-markets create open networks for buyer and supplier interactions. The differences between them lie in system implementation costs, marketplace benefits, and the extent of supplier competitive advantage that develops due to information sharing. In this article, we develop a new theoretical model to analyze the adoption of e-procurement systems from the buyer’s perspective, to explore the set of conditions under which the buyer will prefer to procure via an electronic market instead of using proprietary extranet connections. The primary finding is that a buyer will adopt an e-market approach when the supplier’s competitive advantage derived from access to strategic information is modest compared with the marketplace benefits less the channel costs. In addition, we find that the buyer is likely to have a bigger trading network with an e-market than with an extranet in order to capture the greatest available benefits. Overall, this study offers guidelines for managers to design and select e-procurement channels to fit different procurement needs. [ABSTRACT FROM AUTHOR]

The convergence of the Internet, electronic commerce, and wireless technology has created the basis for the rapid global diffusion of mobile commerce. We believe that one approach to understand mobile commerce diffusion is to study the diffusion of digital mobile devices required in mobile commerce activities. Although prior research in technology diffusion has identified a set of variables that affect the entire diffusion process, our knowledge about the factors that dominate at different states of a diffusion process is still incomplete. This research puts forward a new theoretical perspective to enable managers to better understand the states of technology diffusion in the context of digital mobile phones. Our empirical methods involve a coupled-hazard analysis of an interdependent event model to test the effects of country characteristics, the digital and the analog mobile phone industry characteristics, and the regulatory policies on various states of digital mobile phone diffusion across countries. We conduct non-parametric and parametric survival analysis of the model. The results illustrate a broader set of factors that drive the diffusion speed from the early to the partial diffusion state than from the introduction to the early diffusion state. [ABSTRACT FROM AUTHOR]

The article discusses various reports published within this issue including one on the adoption of social networking sites by global organizations, one on the effects of facilitating conditions on the adoption of information systems, and one on the innovative examination of product incompatibility.

The article discusses various reports published within the issue, including one by June Cheng and Barrie R. Nault on the strategic analysis of an entry timing game and another by Yulian Oliver Yao and Yan Don on supply chain management involving incentive contracts and mechanism design.

An introduction is presented in which the editor discusses various reports within the issue on topics related to Information Systems including history analysis, spatial econometrics, and game theory.