Files and links (1)
SubmittedCC BY-NC-ND V4.0, Open
Journal article
Valuing information technology infrastructures: a growth options approach
Information technology and management, v 8(1), pp 1-17
Mar 2007
Featured in Collection : UN Sustainable Development Goals @ Drexel
Abstract
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.
Metrics
Details
- Title
- Valuing information technology infrastructures: a growth options approach
- Creators
- Qizhi Dai - LeBow College of Business Drexel University Philadelphia PA USARobert Kauffman - Carlson School of Management University of Minnesota Minneapolis MN USASalvatore March - Owen Graduate School of Management Vanderbilt University Nashville TN USA
- Publication Details
- Information technology and management, v 8(1), pp 1-17
- Publisher
- Kluwer Academic Publishers-Plenum Publishers; New York
- Resource Type
- Journal article
- Language
- English
- Academic Unit
- Decision Sciences (and Management Information Systems)
- Web of Science ID
- WOS:000259026200001
- Scopus ID
- 2-s2.0-33947104665
- Other Identifier
- 991014878255304721
UN Sustainable Development Goals (SDGs)
This publication has contributed to the advancement of the following goals:
InCites Highlights
Data related to this publication, from InCites Benchmarking & Analytics tool:
- Collaboration types
- Domestic collaboration
- Web of Science research areas
- Information Science & Library Science
- Management