Research Briefs

Which IT investments benefit the bottom line

Investment in IT has more of an impact on firm profitability than either advertising or research and development, according to a study by Sunil Mithas, assistant professor of decision, operations and information technology. The study uses proprietary, archival data from more than 400 global firms collected over a six years. “IT investments” include all hardware, software, personnel, training, disaster recovery, facilities, and costs associated with supporting the IT environment, from servers and desktop machines to help desk staff.

IT investments to support sales growth—customized offerings, new marketing channels to promote awareness of the company’s products and services, improvements in the way firms manage customer lifecycles—had a big positive impact on a firm’s bottom line.

The pathways leading to profitability aren’t always compatible, so knowing the impact of an IT investment can help managers make savvy choices among discretionary expenditures. “This is a question of interest to many in the business world—what really affects firm profitability?” says Mithas. “We can now be sure that IT does impact firm profitability, and our findings suggest that its effect is greater than that of R&D or advertising.”

“Information Technology and Firm Profitability: Mechanisms and Empirical Evidence” was published the March 2012 MIS Quarterly.

Facebook creates jobs

The proliferation of Facebook and mobile technology applications has spawned an entirely new industry – dubbed the “App Economy” — that added at least 182,000 new jobs to the U.S. economy in 2011. Il-Horn Hann and Siva Viswanathan, co-directors of the Center for Digital Innovation, Technology and Strategy and associate professors of information systems, measured the number of people employed to build, develop and consult on Facebook applications using data provided by Facebook.

The App Economy has also led to job creation at businesses that supply app developers, and in sectors that reap the benefits of increased household spending by app developers and suppliers from new app economy jobs. Hann and Viswanathan conducted an economic impact analysis to estimate that between 129,000 to more than 182,000 people are employed in jobs supported by the app economy.

The researchers calculated the sum of wages and benefits earned by those employed in and supported by the app economy total between $12.19 billion to $15.71 billion.

“Our findings confirm that social media platforms have created a thriving new industry,” said Hann. “As Facebook and other platforms grow, we will continue to see job growth and the ripple effects of these advances in the U.S. economy.”

The results of the study are published in a white paper available on the center’s website.

Identifying difficult employees

Cynthia Kay Stevens, associate professor of management and organization at the Smith School, studied “difficult co-workers” and their behaviors in the workplace. Difficult employees create inefficiencies when others have to pick up their slack, create work-arounds, or become distracted by the situation. Performance declines can lead to lost revenue for the organization, damaged client relations and employee turnover.

So what’s the difference between a colleague who is simply irritating and one who is truly difficult? Signs to watch for include intimidation, sarcasm or personal attacks; poor communication style; micromanaging on the one hand or inadequate oversight on the other; emotional displays; unethical behaviors; and of course sub-par work quality.

For managers dealing with “difficult” employees, Stevens recommended meeting with team members to fully understand the level of the problem and document the consequences of the difficult co-worker’s behavior. That information can be used to confront the difficult person with constructive advice and solutions for improvement, and to set goals for which the employee can be held accountable.

This research is from a working paper delivered at the 2011 Academy of Management Conference.

Your cellphone makes you selfish

Using a cell phone—even thinking about using a cell phone—makes you more selfish, according to a series of studies from Rosallina Ferraro and Anastasiya Pocheptsova, both assistant professors of marketing.

In the experiments, some participants used their cellphones for a few minutes and others used a toy, and then asked how much they would have to be paid to participate in a second study. In another study, participants used their cell phones or Facebook for three minutes, and were then told that a local charity was looking for help and asked if they would be willing to volunteer. In both studies, those who used their cell phones were more self-focused and less likely to offer their time to help others.

This self-centered point of view held true even when participants were merely asked to draw a picture of their cellphones and think about how they used them.

“Cellphones seem to function as a part of you, as an extension of yourself,” says Ferraro. “In many ways it’s like a physical extension as well as a psychological extension of who you are, more so than Facebook or other programs you might use.”

This research is from a working paper.