IRMA-International.org: Creator of Knowledge
Information Resources Management Association
Advancing the Concepts & Practices of Information Resources Management in Modern Organizations

IT Productivity Paradox - A Duopoly Prospective

IT Productivity Paradox - A Duopoly Prospective
View Free PDF
Author(s): Jim Quan (Florida Atlantic University, USA) and Qing Hu (Florida Atlantic University, USA)
Copyright: 2003
Pages: 4
Source title: Information Technology & Organizations: Trends, Issues, Challenges & Solutions
Source Editor(s): Mehdi Khosrow-Pour, D.B.A. (Information Resources Management Association, USA)
DOI: 10.4018/978-1-59140-066-0.ch135
ISBN13: 9781616921248
EISBN13: 9781466665330

Abstract

Over the last two decades extensive empirical studies have been conducted on the contribution of information technology (IT) to productivity and other measures of firm performance. However, few theoretical studies have attempted to explain the contingencies under which IT investments may or may not be valuable to a firm in a competitive market. This research proposes a duopoly competition model to study the impacts of IT investments on firm productivity. We show that in a duopoly market, in order for firm productivity to benefit from IT investments, in addition to the condition under monopoly that its fixed cost has to be sufficiently large in relation to its market size, market sensitivities are also important factors. Moreover, the price sensitivity has a positive impact on the effect of IT investments on productivity and quality sensitivity has a negative impact.

Body Bottom