Asset characteristics and the impact of it on firm scope and performance

Gautam Ray, Ling Xue, Bin Gu, Prabhudev C. Konana

Research output: Chapter in Book/Report/Conference proceedingConference contribution

2 Scopus citations

Abstract

The literature in IS suggests that IT affects firms' vertical and horizontal boundaries. This research examines how the nature of firms' assets and information technology interact to influence the level of vertical integration and horizontal diversification. Using panel data from 2001 to 2004, the analysis suggests that the negative relationship between IT and vertical integration identified in the literature is attributable to IT's role in coordinating firms' tangible assets. On the other hand, the positive relationship between IT and firms' horizontal diversification is attributable to IT's role in leveraging a firm's intangible assets across different businesses. The analysis also indicates that for less vertically integrated firms, IT increases the contribution of tangible assets to performance. And for more diversified firms, IT may increase the contribution of intangible assets to performance. The general implication of this research is that firms with more tangible assets may use information technology to become more vertically specialized, whereas firms with more intangible assets may deploy information technology to become more horizontally diversified.

Original languageEnglish (US)
Title of host publicationICIS 2006 Proceedings - Twenty-Seventh International Conference on Information Systems
Pages393-406
Number of pages14
StatePublished - Dec 1 2006
Event27th International Conference on Information Systems, ICIS 2006 - Milwaukee, WI, United States
Duration: Dec 10 2006Dec 13 2006

Other

Other27th International Conference on Information Systems, ICIS 2006
Country/TerritoryUnited States
CityMilwaukee, WI
Period12/10/0612/13/06

Keywords

  • Diversification
  • Firm structure
  • Information technology
  • Intangible asset
  • Tangible asset
  • Vertical integration

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