Impact of Information Technology Capital on Firm Scope and Performance: The Role of Asset Characteristics

Published at: Academy of Management Journal 56(4), 2013, pp. 1125-1147

51 Pages Posted: 11 Nov 2013

See all articles by Gautamn Ray

Gautamn Ray

University of Minnesota - Twin Cities - Department of Operations and Management Science

Ling Xue

Georgia State University

Jay Barney

Ohio State University (OSU)

Date Written: November 10, 2013

Abstract

This research draws on transaction-cost and resource-based theory to examine how information technology (IT) capital moderates the relationship between different types of assets and firm scope — both vertical integration and diversification. The analysis suggests that IT capital enables firms with narrowly valuable assets to be less vertically integrated and less diversified, and enables firms with broadly valuable assets to be more vertically integrated and more diversified. The moderating influence of IT capital on the relationship between different types of assets and firms’ vertical and product market scope is consistent with transactions-cost as well as resource-based traditions.

Keywords: Resource-Based View, Transaction Cost Economics, Information Technology (IT) Capital, Vertical Integration, Diversification, Usage specificity, Resource flexibility, Electronic Brokerage Effect, Electronic Integration Effect

Suggested Citation

Ray, Gautamn and Xue, Ling and Barney, Jay, Impact of Information Technology Capital on Firm Scope and Performance: The Role of Asset Characteristics (November 10, 2013). Published at: Academy of Management Journal 56(4), 2013, pp. 1125-1147. Available at SSRN: https://ssrn.com/abstract=2352472

Gautamn Ray

University of Minnesota - Twin Cities - Department of Operations and Management Science ( email )

Minneapolis, MN 55455
United States

Ling Xue (Contact Author)

Georgia State University ( email )

35 Broad Street
Atlanta, GA 30303-3083
United States

Jay Barney

Ohio State University (OSU) ( email )

Blankenship Hall-2010
901 Woody Hayes Drive
Columbus, OH OH 43210
United States

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