Relative Industry Concentration and Customer-Driven IT Spillovers

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dc.contributor.authorNault, Barrie R
dc.contributor.authorCheng, Zhuo (June)
dc.date.accessioned2015-05-25T21:34:59Z
dc.date.available2015-05-25T21:34:59Z
dc.date.issued2012-06
dc.description*INFORMS: unless published under the open access option, the publisher will provide a specific copy of the paper that can be posted to a web page https://www.informs.org/Find-Research-Publications/INFORMS-Journals/Rights-Permissions#work.en_US
dc.description.abstractWe examine how one industry’s productivity is affected by the IT capital of its customers and how this effect depends on industries’ relative concentration. These customer-driven IT spillovers result from customers’ IT investments in various information systems that reduce transaction costs through information sharing and coordination and lead to more efficient production and logistics upstream. The magnitude of IT spillovers depends on relative industry concentration because customers in more concentrated industries relative to those of their suppliers are better able to retain the benefits from their IT investments. We model customer-driven effects based on production theory and empirically test the model using two industry-level data sets covering different and overlapping time periods (1987–1999 and 1998–2005), different scopes of the economy (manufac- turing only versus all industries), and different levels of industry aggregation. We find that, given an increase in a downstream industry’s IT capital, there is a significant increase in downstream industry output as well as significant increases in upstream industry output. Moreover, the magnitude of IT spillovers is related to relative industry concentration: A 1% decrease in a customer’s relative industry concentration increases spillovers by roughly 1%. Thus, further increases in IT capital can be justified along the supply chain, and an industry’s relative concentration—which can reflect market power—in part determines the distribution of productivity benefits.en_US
dc.identifier.citationCheng, Z., and B.R.Nault, "Relative Industry Concentration and Customer-Driven IT Spillovers," Information Systems Research, 23, 2 (June 2012), 340-355.en_US
dc.identifier.doihttp://dx.doi.org/10.11575/PRISM/28755
dc.identifier.issn1526-5536
dc.identifier.urihttp://hdl.handle.net/1880/50435
dc.language.isoenen_US
dc.publisherINFORMSen_US
dc.publisher.corporateUniversity of Calgaryen_US
dc.publisher.facultyHaskayne School of Businessen_US
dc.subjectBusiness value of ITen_US
dc.subjectIT-enabled supply chainsen_US
dc.subjectEconomics of USen_US
dc.subjectSpilloversen_US
dc.subjectProduction function frameworken_US
dc.subjectInput-output tablesen_US
dc.subjectIndustry concentrationen_US
dc.titleRelative Industry Concentration and Customer-Driven IT Spilloversen_US
dc.typejournal article
thesis.degree.disciplineManagement Information Systemsen_US
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