#01b the value relevance of announcements of transformational information technology investments. by...

Dehning et al./Transformational IT Investments

MIS Quarterly Vol. 27 No. 4, pp. 637-656/December 2003 637

RESEARCH NOTE

THE VALUE RELEVANCE OF ANNOUNCEMENTSOF TRANSFORMATIONAL INFORMATIONTECHNOLOGY INVESTMENTS1

By: Bruce DehningArgyros School of Business

and EconomicsChapman UniversityOrange, CA [email protected]

Vernon J. RichardsonSchool of BusinessUniversity of KansasLawrence, KS [email protected]

Robert W. ZmudMichael F. Price College of BusinessUniversity of OklahomaNorman, OK [email protected]

1V. Sambamurthy was the accepting senior editor for thispaper.

Abstract

In this paper, we examine the influence of ITstrategic role to extend the findings of Im et al.(2001), Chatterjee et al. (2002) and Dos Santos etal. (1993). Specifically, we demonstrate that ITstrategic role can explain how IT investments ineach of the IT strategic roles might affect thefirm’s competitive position and ultimately firmvalue. We find positive, abnormal returns toannouncements of IT investments by firms makingtransformative IT investments, and with member-ship in industries with transform IT strategic roles.The results of previous research are not found tobe significant when IT strategic role is included asan explanatory variable. These results providesupport for the value of capturing the IT strategicrole of a firm’s IT-related competitive maneuveringin studies striving to understand the conditionsunder which IT investments are likely to produceout-of-the-ordinary, positive returns.

Keywords: IT investment, event study, IT stra-tegic role, stock market reaction

Introduction

Do investments in information technology (IT) payoff? Increasingly, the evidence suggests the


638 MIS Quarterly Vol. 27 No. 4/December 2003

answer is yes, but only when the IT investmentscenario is well targeted, well timed, and accom-panied with complementary investments andactions (Barua and Mukhopadhyay 2000). Thesalient question, then, is not “Do investments in ITpay off?” but rather “Under what conditions doinvestments in IT pay off?” This paper seeks toadd to our collective understanding of this re-phrased research question. Through the use ofevent study methodology and careful researchdesign, it is possible to assess the extent to whichattributes of IT investments, investing firms, and/orinvestment contexts influence shareholders’ inter-pretation of the value relevance of such an-nouncements and, as a consequence, produceabnormal movements in the investing firm’s stockprice.

Previous research examining the value relevanceof announcements of IT investments has pro-duced intriguing results (Dos Santos et al. 1993;Im et al. 2001). However, they fail to produce ageneral understanding of the conditions underwhich IT investments are likely to produce positivereturns. We extend earlier work by proposing anoverarching construct, IT strategic role, thataccounts for factors previously found to affect thestock market response to IT announcements andprovides for a more robust understanding of theconditions that lead investors to positively valuean IT investment. First, we briefly review priorstudies regarding IT investment announcements,and then we elaborate on the influence of ITstrategic role in investors’ appraisals of IT invest-ments. We follow that by proposing an empiricalmodel and test the relation between IT strategicrole and firm value. We conclude with a discus-sion of our results.

Previous, Related EventStudies of IT InvestmentAnnouncements

Dos Santos et al. (1993) examine the stock pricereaction to IT investment announcements in thecontext of two explanatory variables, industry and

innovation. The industry variable (financial firmsversus manufacturing firms) is expected to have asignificant effect because IT is proposed to havea larger impact on financial firms than non-financial firms due to the information intensity ofthe financial industry. The innovation variablecaptures the effect of being the first to use a newtechnology or to introduce a new technology-enabled product or service. As argued, firmsintroducing innovative IT initiatives are likely toexperience increases in profitability until the initia-tive becomes routine, i.e., a competitive necessity,within the industry. While Dos Santos et al. didnot find any significant effects for financial firms,they did find that innovative IT investments wererelated to positive, abnormal stock price returns.

Im et al. (2001) examine the stock price reactionto IT investment announcements in the context ofthree explanatory variables: industry, size, andtime period. Consistent with Dos Santos et al.,the industry variable (financial versus non-finan-cial) serves as a proxy for industry-level informa-tion intensity. Regarding firm size, Im et al. arguethat smaller firms are more likely to have certainadvantages when information is considered anasset and complete contracting is not possible(Brynjolfsson 1994). We expect firm size to berelated to abnormal returns for two additionalreasons. First, competitive advantage is likely tobe more sustainable for small firms as it is moredifficult for other firms to be aware of the actionsof small firms vis-à-vis large firms (Feeny and Ives1991), i.e., the smaller firms are, the less likelythey are to undergo scrutiny and be viewed as athreat by larger firms in the industry. Second, firmsize proxies for the information set available toinvestors prior to the IT investment announce-ment, and the announcements for small firmscontain more news than those for large firms(Atiase 1985). Im et al. introduce the thirdvariable, time period, in order to account for thetime lag between when IT investments are madeand when the benefits show up in financialstatements. While this is a relevant argumentwhen using accounting performance measures, itis not relevant when using market measures asinvestors take into account future performanceimpacts at the time of an announcement. How-


MIS Quarterly Vol. 27 No. 4/December 2003 639

ever, other arguments can be raised for thesalience of a time effect: a maturing of a firm’sunderstanding of IT, a maturing of a firm’s ITinfrastructure and IT application portfolio, and agreater likelihood that complementary investmentshave been made. Subsequent analysis showedthat abnormal returns to IT investment announce-ments were, in fact, related to firm size, timeperiod, and financial/non-financial industry.

Very recently, Chatterjee et al. (2002) undertooka study of 112 IT investment announcementsbetween 1992 and 1995 to assess a propositionthat an important condition that underlay investors’appreciation of IT investments is the targeting ofa firm’s IT infrastructure rather than IT applica-tions. Chatterjee et al. (2002) argue that IT infra-structure investments will induce a positive,abnormal marketplace reaction because of thebroader scope of such investments and theiroption-like characteristics, i.e., they introducerobust technology platforms that can be leveragedby a variety of current and future IT applications.Support for these ideas was confirmed in theensuing empirical analyses.

Hypotheses Development

It is argued that the primary signals to whichinvestors react regarding IT investment announce-ments are the expected marketplace impacttargeted by the IT investment and the dominantrole served by IT across the firms competing in anindustry. Both of these conditions evolve from theIT strategic role construct, conceptualized bySchein (1992) and Zuboff (1988) as:

• Automate, i.e., replacing human labor inautomating business processes

• Informate-up, i.e., provide information aboutbusiness activities to senior management

• Informate-down, i.e., provide informationabout business activities to employeesacross the firm

• Transform, i.e., fundamentally redefinebusiness and industry processes andrelationships

It is important to note that IT strategic roleoperates at both the firm and industry-level. Priorresearch has applied the IT strategic roleconstruct both at a firm level, e.g., Armstrong andSambamurthy (1999), and at an industry-level,e.g., Chatterjee et al. (2001). We examine thereaction to IT investment announcements byaccounting for the targeted strategic role of theannounced IT investment, the dominant industryIT strategic role for the industry of which theannouncing firm is a member, and the interactiveeffect between these two variables. Note, how-ever, that when a company announces an ITinvestment, this investment’s strategic role mayvery well be distinct from the firm’s overall ITstrategic role (which we do not measure). Below,the relationship between these IT strategic rolesand firm value is discussed.

Strategic Role of an IT Investment

Companies that use IT to automate human laborgenerally invest in IT in order to improve theefficiency of existing business processes. Thereare two reasons why automate IT investments arenot expected to produce large increases in profitsor value. First, it has proven extremely difficult forfirms to sustain competitive advantages gainedthrough IT investments (Clemons and Row 1991).Unless the IT-enabled investment is extremelydifficult to duplicate (i.e., involves scarce re-sources, is dependent on a series of antecedentinvestments, involves unique qualities of anorganization’s culture or capabilities, etc.), compe-titors will quickly implement comparable initiativesand allay any relative competitive advantage.Thus, accruing benefits tend to be very short-lived. Second, when such IT practices come todominate an industry, these IT investments arebest referred to as competitive necessities.Rather than providing a firm with a competitive



advantage, the IT-enabled initiatives enable a firmto continue as an active industry participant, atbest maintaining the current level of profitability.In such situations, firm profits may actuallydecrease as competitive dynamics eventuallydrive any accruing benefits to consumers ratherthan to industry participants (Hitt and Brynjolfsson1996).

Informate-up and informate-down, consideredtogether here, involve the use of IT to inducedecision-making and decision-taking at, respec-tively, higher and lower organizational levels.When implemented well, these IT investments dopossess the potential to enhance competitivenessthrough improvements in the effectiveness ofexisting business processes. However, as withautomate IT-enabled initiatives, informate initia-tives typically provide short-term improvements infirms’ performance, given the speed with whichcompetitors are able to implement imitable appli-cations.2 Again, any increases in profitability arelikely to be short-lived and, as the informate modecomes to characterize an industry’s IT-relatedactivities, profits might actually decrease, as con-sumer surplus goes to consumers rather thanindustry members.

It may very well be possible for firms to invest inan enhanced informate mode and to experiencean increase in profits. Similarly, it may very wellbe possible for all the firms in an industry in whichthe informate IT strategic role dominates toexperience a collective increase in profits. In bothsituations, what has likely occurred is that the IT-enabled initiatives are accompanied by comple-mentary changes in firms’ decision structures andcultures such that decisions being made areradically better (due to more and more currentinformation across the value chain) and radicallyquicker (due to elimination of information pro-

cessing and/or decision steps), thus producingstructural changes within existing firm and/orindustry practices. Because of the complexitiesand difficulties involved in introducing and main-taining radical transformations of a firm’s decisionstructure and culture, such IT-enabled initiativesare sustainable (producing a continuing competi-tive advantage) for the subset of industryparticipants who have successfully transitioned tothis new set of industry practices. Because theyare able to extract a premium return from theirbusiness activities, this subset of firms (and foronly this select subgroup of industry participants)has repositioned to a higher level of sustainedprofitability. We argue that this form of an infor-mate IT investment actually reflects the transformIT strategic role, described more fully below.

Companies that use IT in a transform IT strategicrole introduce radical business models that disruptindustry practices (e.g., bypassing select valuechain participants) and market structures (e.g.,creation of new market spaces) as a means toposition themselves more favorably within anindustry. The intended market changes are dis-ruptive rather than incremental, and hencepromise high, sustainable returns if successful.Often, however, such innovations prove unsuc-cessful (Weill 1992) because of associatedcomplexities and uncertainties, thus producing ahigh-risk, high-return investment scenario.

Given the above discussion, we would expect thatfirms announcing transformational IT investmentsare more likely to experience positive, abnormalstock market returns than announcements of firmsmaking non-transformational investments. Theannouncement of a transformational IT investmentthus becomes a strong signal of a firm’s expecteddifferential performance relative to other firms.This leads to our first hypothesis:

H1: Firms announcing IT investmentscharacterized as reflecting atransform IT strategic role willexperience positive, abnormalchanges in market value.

2While informate IT investments normally follow earlierinvestments that capture and store data and thatinterconnect an organization’s data and IT resources,these earlier investments normally reflect automate ITinitiatives.



Industry IT Strategic Role

The industry IT strategic role construct is thoughtto capture, in an elegant manner, the leverag-ability of the industry context within which a majorIT investment is directed. The construct’s sa-lience to the investment context has been demon-strated by Chatterjee et al. (2001), wherebyannouncements by firms of newly created CIOpositions (investments in a firm’s IT governancestructure) produced positive abnormal changes infirms’ stock prices only in industries characterizedas exhibiting a transform IT strategic role. Chanet al. (1990) and Doukas and Switzer (1992)report evidence of firm valuation outcomes in arelated research arena, research and develop-ment (R&D) investment. In those studies, statis-tically significant R&D announcement day returnswere observed only for firms in R&D-intensiveindustries, i.e., those devoting substantialresources to R&D.

An investment cannot take place in isolation fromthe milieu of enacted business strategies andinstitutional structures comprising the market-place, or industry, in which the investment occurs.Correspondingly, investors interpreting a firm’sannouncement of an IT investment are likely to doso through a lens reflecting the role that IT serveswithin the industry and, hence, the associatedlikelihood that IT investments will produce sustain-able increases in industry profitability. Such anindustry-focused lens is seen as particularlycritical for the value relevance of IT investments,given both the relative ease with which compe-titors are generally able to react to IT-basedstrategic actions and the high uncertainty gener-ally associated with IT investments targeted atinducing structural changes in industry practicesand markets.

When the transform mode comes to dominate anindustry, the structural changes taking placeregarding value chains and market spaces essen-tially partition the industry’s members into a set ofstrategic groups, with each strategic group re-flecting a unique competitive strategy and oper-

ating at a differential profitability level. Note thateven when the transform IT strategic role domi-nates within an industry, not all firms in theindustry will be engaged in higher risk, trans-formational IT investment initiatives. Invariably,we argue, the profit levels of these strategicgroups are associated with each strategic group’scapability to successfully implement these trans-formational IT initiatives (which, along with otherstrategic investments, enable the strategic group’sunique competitive posture). Note further that weare not attempting to characterize the nature ofthese individual strategic groups; transformationalIT investments can enable and support a myriadof strategic actions. Most important, we arguefurther that the industry as a whole is able tooperate at elevated profit levels relative to all otherindustries. Where does this elevated profitabilitycome from? Three sources seem most likely:from under-performing strategic groups within theindustry, from overall industry market growth, andfrom the industry’s penetration of other industries’markets. Announcing an IT investment within anindustry undergoing IT-enabled transformation is,in essence, an act of declaring or reinforcingmembership in one or more of these strategicgroups with elevated profit levels. The market willreact, then, based on the differentiated profit levelof the industry and the likelihood that the companywill successfully transform to realize the benefitsfrom IT.

It is thus posited that announced IT investmentswithin industries in which the transform ITstrategic role dominates are seen by investors assignals of either a future increase in the averageor normal level of industry profitability or of theinvesting firm’s entry to more profitable segmentsof the industry and, hence, likely to produce apositive increase in firm value. This discussionleads to our second hypothesis:

H2: Firms announcing IT investmentsin industries in which the trans-form IT strategic role dominateswill experience positive, abnor-mal changes in market value.



Joint Consideration of Investment-Level and Industry-Level IT StrategicRole

In addition to considering the influence ofinvestment-level and industry-level IT strategicroles, it is important to recognize that differentialeffects may be realized when a firm’s strategicintent with regard to an IT investment is viewedfrom the prevailing IT strategic role of that firm’sindustry. However, we do not believe that such ajoint effect will be reflective of a multiplier effect,i.e., that an announcement of a transform ITinvestment within a transform industry wouldpromote a supernormal influence on a firm’s stockprice. If an industry is in transform mode, inves-tors would expect to observe transform investmentannouncements from firms in the industry.Instead, what might promote an abnormal (in thiscase, negative) reaction by investors would beannouncements by firms in a transform industry ofautomate or informate IT investments. Morespecifically, we argue that a salient interactiveeffect arises when the nature (automate or infor-mate) of a firm’s IT investment is distinct from, i.e.,leads or lags, the dominant industry IT strategicrole. Following again a logic that investors inter-preting firms’ IT investment announcements willdo so through a lens reflecting industry ITstrategic role, we offer two additional researchhypotheses:

H3: Firms announcing IT investmentsthat lead their industry IT strate-gic role will experience positive,abnormal changes in marketvalue.

H4: Firms announcing IT investmentsthat lag their industry IT strategicrole will experience negative, ab-normal changes in market value.

Research Methodology

The objective of this empirical analysis is twofold:to examine the influence of IT strategic role in

explaining the wealth effects accompanyingannouncements of IT investments, and to contrastthe influence of IT strategic role relative to thoseof other variables previously used to explain thewealth effects of IT investment announcements(Im et al. 2001). In this section, the data setcreated for the analysis and the estimationmethod are described.

Compilation of the study’s data set began with thesample of 97 IT investment announcementsoccurring from 1981 through 1988 that were iden-tified by Dos Santos et al. (1993). Next, thesample of 141 IT investment announcementsgathered by Im et al. (2001) over the time period1989 through 1996 was added. Finally, the 112 ITinvestment announcements from Chatterjee et al.(2002) gathered from 1992 through 1995 werealso used. All duplicates among the threesamples were removed resulting in a total of 355IT investment announcements during the period1981 through 1996.3

The industry IT strategic role coding applied wasthat gathered and used by Chatterjee et al.(2001). Here, the instrument provided as Appen-dix A was designed and sent to four well-recognized scholars who both research and teachin the area of IT strategy. Each judge was askedto indicate whether the role that IT served withinan industry in that specific time period would bestbe represented as automate, informate (up ordown), or transform. Inter-rater reliability was 0.80for the time period 1987 through 1994 and 0.82 forthe time period 1995 through 1998. A mode valuefor the level of IT-driven transformation wascomputed and assigned to each industry.

3In addition, we also removed two announcements(outliers with highly positive abnormal returns) from thedata set analyzed by Im et al. (2001) due to con-tamination effects from other announcements not relatedto the IT investment announcement (in one case, apositive quarterly earnings report the day after the ITinvestment announcement; in the other case, a cost-reduction/restructuring initiative the same day as the ITinvestment announcement), resulting in a final datasetof 353 announcements.



The measure of IT strategic role at the industry-level commenced with the 1987 time period. Forthe sake of completeness and our wish toconsider all available IT investment announce-ments, the level of IT-enabled transformation from1987 through 1993 was applied to the earlier 1981through 1986 period. While it is possible that thelevel of IT-enabled transformation across theseindustries would be different for the 1981 through1986 period, any bias present would be expectedto work against finding significant support for theresearch hypotheses.4

In order to categorize IT strategic role at aninvestment level, each IT investment announce-ment was carefully read to assess the firm’sintended IT strategic role and coded as automate,informate, or transform by two judges (bothauthors of this paper). The coding rules used areprovided in Appendix B, and Appendix C providesone example each of automate, informate, andtransform IT investment announcements. Inter-rater reliability was 0.83, with all differencesreconciled between the judges. The impact ofannouncements on stock prices is computedusing event study methodology commonly utilizedin accounting and finance studies (Brown andWarner 1985) and increasingly common in ISevent studies (Subramani and Walden 2001).The estimation method and days in the estimationperiod are identical to Chatterjee et al. (2001).

Results

Table 1 provides statistics regarding the numberof announcements per year. A cross-tabulation ofthe investment-level and industry-level IT strategicrole associated with each announcement ispresented in Table 2.

General Linear Model Results

A general linear model (GLM) was used to test ifthe mean cumulative abnormal return (CAR) foreach type of IT strategic role was different fromzero when additional factors are included in theanalysis. In this GLM formulation, the dependentvariable is the three-day CAR around the date ofthe IT investment announcement (day -1, 0, +1).Investment and industry IT strategic role wererandom factors in the model, with two dummyvariables representing the three nominal groupswithin the IT investment strategic role classifica-tion and two dummy variables representing thethree nominal groups within the industry ITstrategic role classification. This coding does notpresume an interval scale for the three distincttypes of roles. Control variables in the model arethe size of the announcing firm (total assets in theyear of the IT investment announcement), time(number of days from the first IT investmentannouncement in the full sample to the date ofeach announcement), and a dummy variabledenoting those announcing firms that are infinancial industries were added as covariates.5

The results of the GLM analysis can be found inTables 3 and 4.

Table 3 reports the mean CAR for the overall maineffects for investment and industry IT strategicrole. The first hypothesis states that firms makingIT investment announcements characterized as atransform IT strategic role will realize an abnormalincrease in value. This is captured by the ITinvestment strategic role main effect. The only ITinvestment strategic role with a mean CARsignificantly different from zero is a transformstrategic role (CAR = 1.512%, p < .01), supportinghypothesis one. The second hypothesis statesthat firms making IT investment announcementswithin an industry characterized as having a trans-

4As a test of sensitivity, only those IT investmentannouncements for 1987 through 1996 (omitting thosebefore 1987) were examined, producing essentially thesame results.

5We do not include the innovativeness measure of ITinvestment measure used by Dos Santos et al. (1993) ortne IT infrastructure measure of Chatterjee et al. (2001).The innovativeness variable is highly correlated withindustry transformation strategic role. After removingthe two contaminated announcements (see footnote 3),the IT infrastructure variable was not a significantpredictor of CAR.



Table 1. Descriptive Statistics 1981– 1996: Number of IT InvestmentAnnouncements by Year (N = 353)

Year Number Year Number1981 1 1990 221982 6 1991 171983 2 1992 331984 3 1993 451985 32 1994 461986 17 1995 481987 18 1996 201988 18 Total 3531989 25

Table 2. Descriptive Statistics 1981– 1996: Cross-Tabulation of Announcements byIT Strategic Role (N = 353)

Industry ITStrategic

Role

IT Investment Strategic Role

TotalsAutomate Informate Transform N/A*

Automate N = 112 N = 56 N = 17 N = 25 N = 210Informate N = 41 N = 27 N = 18 N = 9 N = 95Transform N = 19 N = 12 N = 13 N = 4 N = 48Totals N = 172 N = 95 N = 48 N = 38 N = 353

*Insufficient information to code the announcement—either the announcement was missing or did not give enoughinformation about the nature of the IT investment.

Table 3. General Linear Model Results: Main EffectsMean CARa

IT Investment Strategic Roleb

Automate Informate Transform0.051% 0.403% 1.512%

Industry IT Strategic RoleAutomate Informate Transform0.003% 0.557% 1.405%

Values in bold are significant at p < .01.

aThree-day (days -1, 0, and +1) cumulative abnormal returns (CAR) controlling for size, time, and financial/non-financial firm distinction, 1981–1996, N = 353.bThe 38 announcements with a missing IT investment strategic role were assigned the industry IT strategic roleas IT investment strategic role for this analysis.



Table 4. General Linear Model Results: Interactive EffectsMean CAR

Industry IT StrategicRole

IT Investment Strategic RoleAutomate Informate Transform

Automate -0.361% -0.703% 1.074%Informate 0.235% 0.250% 1.186%Transform 0.278% 1.661%* 2.277%**

*[**] significant at the .05 [.01] level (one-tailed tests of significance)Values in bold are significant at p < .05

form dominant IT strategic role will realize anabnormal increase in value. This is captured bythe industry IT strategic role main effect. The onlyindustry IT strategic role with a mean CARsignificantly different from zero is a transformstrategic role (CAR = 1.405%, p < .01), supportinghypothesis two.

The GLM also allows tests of combinations ofinvestment and industry IT strategic roles.Table 4 reports a cross-tabulation of investmentand industry IT strategic role. These tests specifywhether the abnormal returns are different fromzero for specific levels of IT investment strategicrole (automate, informate, or transform) at specificlevels of industry strategic role (automate, infor-mate, or transform). Four of these combinationsresult in CARs of greater than 1 percent: whenthe IT investment strategic role is transform andthe industry IT strategic role is automate, infor-mate, or transform, and when the IT investmentstrategic role is informate and the industry ITstrategic role is transform. Possibly due to thelimited power of these tests, only two of thesecombinations result in abnormal returns signifi-cantly greater than zero. The first is an IT invest-ment announcement that specifics an informatestrategic role for the investment at a time whenthe industry strategic role is transform (meanCAR = 1.661%, p < .05). The second is an ITinvestment announcement that specifics a trans-form strategic role for the investment at a timewhen the industry strategic role is transform(mean CAR = 2.277%, p < .01). Mean CARs werenot significantly different from zero for any othercombinations of investment and industry IT stra-

tegic role. These results lend further support forhypotheses one and two, which argue for thesalience of the transform industry strategic role(i.e., positive abnormal returns are observed forboth informate and transform IT investments) andfor transform IT investments. Further, theseresults also suggest that firms announcing aninformate IT investment within an industry charac-terized by a transform industry IT strategic role arenot penalized for this lagging investment.

Multiple Regression Results

In order to directly examine the lead (hypothe-sis 3) and lag (hypothesis 4) effects as well as toexplicitly contrast the effects of the IT strategicrole variables relative to the effects of thevariables examined by Im et al. (2001), multipleregression analysis was performed. Results areprovided in Table 5. Here, the dependent variableis the three-day CAR around the date of the ITinvestment announcement. Three models werespecified. In model 1, we examine industry-leveland investment-level IT strategic role as maineffects only. In model 2, we examine an industry-level main effect and then account for investment-level IT strategic role via a lead (IT investmentstrategic role transforms or leads industry IT stra-tegic role) and lag (IT investment strategic rolelags industry IT strategic role) dummy. In model3, we examine the two main effects along with aninteraction (i.e., multiplier) effect. In order toaccount for the Im et al. predictors, we alsoinclude size of the announcing firm, time, and afinancial dummy variable as in the GLM analysis.



Table 5. Regressing IT Investment Announcement Excess Returnsa on IT StrategicRole, Year of Announcement, and Industry Variables

Variable Model 1 Model 2 Model 3Intercept -0.003b

-0.576c-0.005-0.833

0.003-0.582

Assets -0.053-0.874

-0.032-0.532

-0.052-0.866

Time 0.0230.393

0.0030.056

0.0230.390

Financial Firm 0.0040.061

0.0220.347

0.0040.063

Transform Industry IT Strategic Role 0.1202.121*

0.1071.713**

0.1251.934*

Transform IT Investment StrategicRole

0.1382.545*

0.1422.299*

Investment Leads Industry 0.1702.782**

Investment Lags Industry 0.0671.009

Transform Industry IT Strategic Role× Transform IT Investment StrategicRole Interaction

-0.009-0.134

Adjusted R2 0.032 0.033 0.029F-Statistic 3.34** 2.99* 2.77*N 353 353 353aStandardized coefficientbt-statistic *p < .05; **p < .01 (one-tailed test)

Dependent VariableCAR = Three-day (days -1, 0, and +1) cumulative abnormal returns

Independent VariablesAssets = Total assets in the year of the IT investment announcement (Source: Compustat)

Time = Number of days from the first IT investment announcement in the full sample to thedate of each announcement

Finanical Firm = 1 if firm is a financial firm (SIC code 6000-6299); 0 otherwise

TransformIndustry IT

Strategic Role

= 1 if the firm has membership in an industry characterized as having a transformindustry IT strategic role (see Appendix A); 0 otherwise

Transform ITInvestment

Strategic Role

= 1 if the investment made by the firm is judged to be a transformative investment; 0otherwise

Lead Variable = 1 if IT investment strategic role transforms or leads the industry IT strategic role

Lag Variable = 1 if IT investment lags the industry IT strategic role



All three of the regression models are significantoverall.6 In each case, the variables representingsize, time,7 and financial orientation are dominatedby the IT strategic role variables. We find positiveand significant returns for industry-level andinvestment-level IT strategic role in both models 1and 3, and for industry-level IT strategic role andthe lead variable in model 2. These findings, thus,are supportive of the influence of a dominantindustry strategic role of transform (H1), of trans-form IT investments (H2), and of firms undertakingIT investments whose strategic role leads that oftheir industry (H3). We also note positive but notsignificant stock market returns for the lagvariable. While investors seem to reward firmsthat announce IT investments that lead theirindustry, they do not seem to penalize firms thatannouncing lagging IT investments. Finally, asargued, the joint effect of an industry-level andinvestment-level transform IT strategic role ap-pears additive rather than multiplicative. In sum-mary, then, these multivariate results providestrong support for our first, second, and thirdresearch hypotheses.

Discussion

The above results suggest that the factor effectsreported in Im et al. (2001) are actually manifes-tations of the positive returns experienced fromtransformative IT investments. First, with thepassage of time, IT-enabled structural change isoccurring in an ever-greater number of industries,including but certainly not limited to financial-services firms. Most likely, this time effect isreflective of an ever-richer portfolio of IT applica-tions, of a maturing in firms’ understanding of theenabling role of IT and, as a consequence, of anincreased likelihood that complementary invest-

ments in other intangible assets, e.g., workerknowledge, business process redesign, organiza-tional restructuring, and interorganizational rela-tionships (Brynjolfsson and Hitt 1993; Im et al.2001) required for the realization of positivereturns from IT investments (Barua and Mukho-padhyay 2000) and characteristic of industrystructural changes (Segars and Dean 2000).Finally, it is generally easier to undertake transfor-mative IT initiatives in smaller firms than in largerfirms, regardless of whether or not they areintended to induce structural change within anindustry. The dysfunctional factors (goal conflict,communication failure, competing priorities, etc.)inhibiting a successful initiative, especially onethat might introduce structural change (Brown andEisenhardt 1998), tend to intensify with increasesin organizational size. Further, it is more likelythat IT-enabled initiatives intended to inducestructural changes within an industry will beundertaken by smaller firms as larger firms tend tohave more to lose if current business practicesbecome noncompetitive.

These findings add to the accumulating evidenceregarding the value-adding role of IT. When com-panies announce IT investments, it was posited,and empirically demonstrated, that investors reactpositively based on their expectations of a firmgaining a sustained increase in earnings. Thereare two interrelated reasons for such investorbehaviors. First, the benefit streams from themajority of the IT investments made by firms tendto be either short-lived or highly uncertain, andthese benefit streams often move, over time, tocustomers through a lowering of average industryprofits. As a consequence, investors are lookingfor signals promising out-of-the-ordinary gainsfrom IT investments. Second, industries vary inthe extent to which IT investments have induced,or are inducing, structural changes in industry andmarket practices within evolving industry seg-ments. IT-enabled industry structural change isconceptualized as occurring most frequently withincertain industries (transform strategic IT role) andoccasionally within other industries (automate orinformate IT strategic role). As a consequence,when firms announce IT investments, investorslook for signals that indicate the investing firm ismoving into a more-profitable industry segment—actions very likely to produce long-term value for

6We also run the multiple regression analysis using thetwo-day returns over days –1 and 0 and find similarresults throughout.

7As a sensitivity test, we measure time as the number ofyears, or simply as a binary variable that equals one ifthe announcement is in the later period (1995–1996) andzero otherwise. In neither case do we find significancein the multiple regressions detailed in Table 5.



the investing firm and, thus, significantly influ-encing investors’ firm valuation decisions.

This study makes a significant contribution byshowing how IT strategic role (automate, infor-mate, transform) explains the market reaction toIT investment announcements and subsumes thefindings of previous research. While IT invest-ments certainly possess the potential to increasean individual firm’s profits, the duration of suchincreases is dependent upon the strategic role ofthe IT. As transform IT investments can serve asthe basis for structural changes within industrypractices, they serve to both differentiate theinvesting firm from others in their industry andinduce permanently higher levels of profitabilitywithin a new segment within the industry. Whentransform IT investments come to dominate anindustry, the industry is seen as providing acontext where IT-enabled initiatives possess agreater likelihood of returning positive, abnormalreturns.

From a theoretical perspective, we stronglyadvocate that research models specified to reflectthe effect of IT-related events (such as IT invest-ments) on firms’ stock prices incorporate variablesthat reflect the transformational nature of ITinvestments as well as the extent to which thefirm’s industry as a whole is undergoing IT-enabled transformation. What seems clear fromour analyses are (1) the importance of capturingwithin research models the likelihood that theinvesting firm will experience sustained, extra-ordinary returns from its IT investments and(2) that such returns accrue from transformational,rather than incremental, IT-enablement.

From a practice perspective, we advocate thatfirms announcing major IT-related events, such asIT investments that induce structural change infirm and/or industry practices, be sure to clearlyarticulate both the firm-specific and wider industryimplications of the IT-related event. Not sur-prisingly, IT investments that promise a sustain-able stream of extraordinary profits do appear tobe well received by the investor community. It isalso of interest that investors do not appear topenalize firms announcing IT investments that lagtheir dominant industry IT strategic role, implyingthat firms should not be averse to announcing IT-

related events whose intended impact is notexpected to be transformational.

Limitations

Despite our efforts to isolate the IT investmentannouncements from all other firm news (see thedescription of the data in the Research Method-ology section), it is possible that the results aredriven by other contemporaneous events notcovered in a press announcement. However, weexpect the effect of any contemporaneous eventsto randomize across the sample firms and haveneither a positive nor a negative impact on ourresults. There is also the possibility that this eventwas anticipated. If the IT investment announce-ment was anticipated and leaked to the market inadvance of the formal announcement, noabnormal returns would be expected in the three-day event widows. This possible leakage biasesus against finding statistically significant abnormalreturns during the event period.

In addition, it would seem clear that investorsreacting to signals of either transform IT invest-ments or IT investments in transform mode in-dustries do so in conjunction with their perceptionsof the likelihood that the firm in question pos-sesses the IT-related capabilities as well as over-all managerial capabilities to successfully carryout such IT initiatives. Future research shouldstrive to capture measures of such capabilitiesand include these as salient firm-specific attri-butes within the research models being applied.

Conclusions

In this paper, we examine the influence of ITstrategic role to extend those of Im et al. (2001),Dos Santos et al. (1993), and Chatterjee et al.(2002). Specifically, we demonstrate that IT stra-tegic role can explain how IT investments mightaffect the firm’s competitive position and ultimatelyfirm value. We find positive, abnormal returns tofirms investing in IT with a transform strategic roleand making IT investments in industries under-going IT driven transformation.



Our results thus provide empirical support for theinclusion of both investment-specific IT strategicrole and an industry’s prevailing IT strategic role intheoretical models aimed at representing andexplaining the conditions under which IT invest-ments are likely to produce out-of-the-ordinary,positive returns. IT-enabled initiatives can be as-sessed most validly when viewed in the context ofcompetitors’ IT-enabled actions and not asisolated events. As Sambamurthy (2000, p. 259-260) argues,

As IT capabilities become one of thestrategic levers of competitive strategyand market maneuvering, research isneeded to advance knowledge about IT-shaped competitive moves and rivalry….Researchers should examine the dyna-mics of these action-response behaviorsacross firms and industries to generatetaxonomies of IT-shaped competitivemoves, and identify conditions influ-encing the effectiveness of these moves.

The IT strategic role metric applied here is a verycoarse measurement of an industry’s IT-shapedcompetitive rivalry. Further, it requires the use ofa set of very expert judges, a scarce resource thatmay not be generally available to all researchers.We strongly encourage research that (1) developsand applies finer (and more generally available)measures of this particular variable and (2) con-ceptualizes and then develops measures for otheraspects of IT-shaped competitive rivalry. Suchvariables and their associated measurementscales are certain to be usefully applied to thebroad range of phenomena reflecting the complexinteractions among business strategies, IT-enabled initiatives, and business performance.

References

Armstrong, C., and Sambamurthy, V. “InformationTechnology Assimilation In Firms: The Influ-ence of Senior Leadership and IT Infrastruc-tures,” Information Systems Research (10:4),December 1999, pp. 304-327.

Atiase, R. K. “Predisclosure Information, FirmCapitalization and Security Price BehaviorAround Earnings Announcements,” Journal of

Accounting Research (23:1), Spring 1985, pp.21-36.

Barua, A., and Mukhopadhyay, T. “InformationTechnology and Business Performance: Past,Present and Future,” in Framing the Domainsof IT Management: Projecting the Futurethrough the Past, R. W. Zmud (ed.), PinnaflexEducational Resources, Cincinnati, OH, 2000,pp. 65-84

Brown, S. J., and Warner, J. B. “Using DailyStock Returns: The Case of Event Studies,”Journal of Financial Economics (14:1), 1985,pp. 3-31.

Brown, S. L., and Eisenhardt, K. M. Competing onthe Edge: Strategy as Structured Chaos,Harvard Business School Press, Boston, MA,1998.

Brynjolfsson, E. “Information Assets, Technologyand Organization,” Management Science(40:12), 1994, pp. 1645-1662.

Brynjolfsson, E., and Hitt, L. “Is Information Sys-tems Spending Productive? New Evidence andNew Results,” in Proceedings of the FourteenthInternational Conference on Information Sys-tems, J. I. DeGross, R. P. Bostrom, and D.Robey (eds.), Orlando, FL, 1993, pp. 47-64.

Chan, S. H., Martin, J., and Kensinger, J. “Corpor-ate Research and Development Expendituresand Share Value,” Journal of Financial Econo-mics (26:2), August 1990, pp. 255-276.

Chatterjee, D., Pacini, C., and Sambamurthy, V.“The Shareholder Wealth and Trading VolumeEffect of IT Infrastructure Investments,” Journalof Management Information Systems (19:2),2002, pp. 7-43.

Chatterjee, D., Richardson, V. J., and Zmud, R.W. “Examining the Shareholder Wealth Effectsof New CIO Position Announcements,” MISQuarterly (25:1), March 2001, pp. 43-70.

Clemons, E. K., and Row, M. C. “Sustaining ITAdvantage: The Role of Structural Differ-ences,” MIS Quarterly (15:3), 1991, pp. 275-292.

Dos Santos, B. L., Peffers, K., and Mauer, D.“The Impact of Information Technology Invest-ment Announcements on the Market Value ofthe Firm,” Information Systems Research (4:1),March 1993, pp. 1-23.

Doukas, J., and Switzer, L. N. “The Stock Mar-ket’s View of R&D Spending and Market Con-centration,” Journal of Economics and Business(44:2), May 1992, pp. 95-114.



Feeny, D. F., and Ives, B. “In Search of Sustain-ability: Reaping Long-Term Advantage fromInvestments in Information Technology,” Jour-nal of MIS (7:1), 1991, pp. 27-46.

Im, K. S., Dow, K. E., and Grover, V. “A Reexam-ination of IT Investment and the Market Valueof the Firm—An Event Study Methodology,”Information Systems Research (12:1), March2001, pp. 103-117.

Hitt, L., and Brynjolfsson, E. “Productivity, Busi-ness Profitability and Consumer Surplus:Three Different Measures of IT Value,” MISQuarterly (20:2), 1996, pp. 121-142.

Sambamurthy, V. “Business Strategy in Hyper-competitive Environments: Rethinking theLogic of IT Differentiation,” in Framing theDomains of IT Management: Projecting theFuture through the Past, R. W. Zmud (ed.),Pinnaflex Educational Resources, Cincinnati,OH, 2000, pp. 245-261.

Schein, E. H. “The Role of the CEO in the Man-agement of Change: The Case of InformationTechnology,” in Transforming Organizations,T. A. Kochan and M. Useem (eds.), OxfordUniversity Press, Oxford, 1992, pp. 325-345.

Segars, A. H., and Dean, J. W. “Managing theNexus of Information Technology and RadicalChange: An Organizational Capabilities Per-spective,” in Framing the Domains of IT Man-agement: Projecting the Future through thePast, R. W. Zmud (ed.), Pinnaflex EducationalResources, Cincinnati, OH, 2000, pp. 221-244.

Subramani, M. R., and Walden, E. “The Impact ofE-Commerce Announcements on the MarketValue of Firms,” Information Systems Research(12:2), 2001, pp. 135-154.

Weill, P. “The Relationship between Investmentin Information Technology and Firm Perfor-mance: A Study of the Valve ManufacturingSector,” Information Systems Research (3:4),1992, pp. 307-333.

Zuboff, S. In the Age of the Smart Machine: TheFuture of Work and Power, Basic Books, NewYork, 1988.

About the Authors

Bruce Dehning is an assistant professor ofAccounting at Chapman University’s Argyros

School of Business and Economics. He holds aB.S. in Finance, an M.S. in Accounting, and aPh.D. in Accounting from the Leeds School ofBusiness at the University of Colorado. ProfessorDehning’s current research is on the returns toinvestments in information technology. Currentlyhe is working on projects investigating the effect ofinformation technology on firm performance, andthe market’s valuation of IT investments. Brucehas previously published work in Journal ofStrategic Information Systems, Information andManagement, Journal of Information Systems, andother academic journals. Bruce’s work experienceis in insurance and as an accounting informationsystems consultant for small businesses.

Vernon J. Richardson is an Associate Professorand KPMG Faculty Scholar in the School ofBusiness at the University of Kansas. ProfessorRichardson received his Ph.D. from the Universityof Illinois at Urbana-Champaign. His researchinterests include the value relevance of intangibleassets and information technology investments.Professor Richardson has published articles inMIS Quarterly, Communications of the ACM,Journal of Accounting and Economics, Journal ofMarketing, American Business Law Journal andFinancial Analysts Journal. He is currently theassociate editor at the Journal of InformationSystems.

Robert Zmud is Professor, Michael F. Price Chairin MIS and Director, Division of MIS, Michael F.Price College of Business, University of Okla-homa. His research interests focus on the organi-zational impacts of information technology and onthe management, implementation and diffusion ofinformation technology. He is a senior editor withInformation Systems Research and with theJournal of the AIS, and he currently sits on theeditorial boards of Management Science, Aca-demy of Management Review, and Informationand Organization. Bob also serves as theresearch director for the Advanced PracticesCouncil of SIM, International. He holds a Ph.D.(1974) from the University of Arizona and a M.S.from M.I.T.



Appendix A

Assessing Industry IT Strategic Role

The instrument sent to the four expert judges is provided along with the mode response value by industry.

Please indicate which of the following best reflects the role of IT in the specified list of industries during theperiods 1987–1994 and 1995–1998:

Automate: Replace human labor by automating business processes.Informate Up/Down: Provide data/information to empower management and employeesTransform: Fundamentally alter traditional ways of doing business by redefining

business processes and relationships

Rating Scale: Automate (A); Information Up/Down (I); Transform (T)

1987–1994

Industry IT RoleAirlines TBanking AComputer Manufacturing IComputer Software Products and Services ADiversified Chemicals Manufacturer IDiversified Foods Manufacturer IElectric Equipment, Electronic/Scientific Test & Measurement InstrumentsManufacturer

A

Financial Services AFluid Systems Manufacturer AFood Services AHealth Care Products Division AHeavy Construction AIT Consulting Services IMedia – Diversified IPharmaceutical Manufacturing APublishing – News Services, Newspapers and Periodicals ARetail – Department Stores IRetail – Grocery Stores ASemiconductor Equipment and Materials Manufacturing ITelecommunications Services ATransportation – Ground & Railroad ATransportation Equipment Manufacturing A



1995–1998

Industry IT RoleAccounting, Bookkeeping, Collection & Credit Reporting T

Advertising T

Agricultural Machinery Manufacturing I

Airlines T

Automotive Manufacturing I

Automotive Parts & Service I

Banking T

Biotechnology Products/Services I

Cleaning Products Manufacturing I

Computer Manufacturing I

Computer Software Products & Services T

Diversified Building Materials Manufacturing I

Diversified Chemicals Manufacturer I

Diversified Foods Manufacturing I

Electrical Equipment, Electronic/Scientific Test & Measurement InstrumentsManufacturer

I

Financial Services T

Fluid Systems Manufacturing I

Food Services I

Health Care Products Distribution I

Heavy Construction I

Information Collection and Delivery Services T

Internet and Online Service Providers T

IT Consulting Services I

Long Term Care Facilities T

Media – Diversified T

Metals (Aluminum, Steel) Manufacturer A

Pharmaceuticals Manufacturer I

Printing, Photocopying & Graphics Design I

Publishing – News Services, Newspapers & Periodicals T

Reinsurance I

Retail – Apparel/Accessories & Specialty Products I

Retail – Department Stores & Discount/Variety Stores I

Retail – Grocery Stores I

Semiconductor Equipment & Materials Manufacturer I

Staffing, Outsourcing & Other Human Resources Services T



Surety, Title and Miscellaneous Insurance A

Telecommunications Services T

Telemarketing, Call Centers & Other Direct Marketing T

Transportation – Ground & Railroad A

Utilities – Electric A

Wholesaler – Floral Products & Groceries T

Wire & Cable Manufacturer I

Appendix B

Assessing the IT Investment Strategic Roleof IT Investment Announcements

Coding Rules

• Do not code information about IT that is embedded in industrial technology.

Automate Rules

• Replace human labor by automating business processes.• Virtually no IT-driven transformation efforts.• Goals: Improving, applying and refining firm capabilities, substitute labor with computers.• Outcomes: Clearly definable benefits, e.g. cost reduction, process consistency, process

efficiency.Automate Examples• IT providing enhancements to existing processes or practices.• IT providing a new channel for old information (i.e., using technology to provide traditional ser-

vices to the deaf, etc.).• Choosing a long distance carrier without adding new services.

Informate Up/Down Rules

• Provide new data/information to empower management, employees, or customers.• An intermediate level of IT-driven transformation efforts.• Goals: Better decision making, better coordination and collaboration.• Outcomes: ‘Soft’ benefits, difficult to evaluate in advance e.g. better decisions shared under-

standing, clearer picture of cause-effect relationships, greater understanding of operatingenvironment.

Information Up/Down Examples• IT providing new information to customers.• IT creating new information flows.• Choosing a long distance carrier to provide new services such as a new network.



Transform Rules

• Fundamentally alter traditional ways of doing business by redefining business capabilities and/or(internal or external) business processes and relationships.

• Strategic acquisition to acquire new capabilities or to enter a new marketspace.• Use of IT to dramatically change how tasks are carried out…is the move recognized as being

important in enabling firm to operate in different markets, serve different customers…gainconsiderable competitive advantage by doing things differently.

Transform Examples• IT changing the way a marketplace operates.• IT providing new ability, new services, restructuring the market.• New IT-based products typically transform.• Strategic alliances or purchases are typically transform.

Appendix CExamples of Coded IT Investment Announcements

Automate Example

September 26, 1985, Thursday SECTION: Pg. 2 LENGTH: 496 words HEADLINE: Exxon Unveils Point-of-Sale System; MCorp to Be First Bank Participant BYLINE: Special to the American Banker DATELINE: DALLAS BODY: Exxon Co. U.S.A. has developed its own communications network to support the acceptance of debit cardsat its gas stations around the country.

MCorp, which operates the MPact Electronic Banking Network through its subsidiary MTech, will be thefirst banking company to participate in Exxon’s point-of-sale system.

The system will allow bank customers to purchase gasoline and other products at Exxon stations with theirMPact cards.

Exxon Co. U.S.A., a subsidiary of the Exxon Corp., is initiating service with the system in Austin and SanAntonio, where it will be available to MPact customers by early December at about 100 stations.

Also late this year, the system will become available at 275 to 300 stations in the Dallas-Fort Worth area.Next year, Exxon’s system will be expanded to about 350 Houston-area stations and to other majormarkets.

Exxon also plans to start operating the system at up to 275 facilities throughout Florida later this year.Eventually, Exxon is expected to have the payment system available in 17,000 stations throughout thenation.



An oil company spokesman said Exxon is negotiating with other banks to accept their cards in the point-of-sale system.

Exxon is also testing its own debit card at stations in the Phoenix area. ‘’The test is still under way,’‘ an oilcompany spokesman said. “We’re still looking at that entire area.”

Other major oil companies, such as Mobil Oil Corp. and Shell Oil Co., are installing similar systems at theirretail stations. Mobil, which also accepts MPact cards, has committed about $30 million to a point-of-saleprogram to link all its service stations in 25 states.

An Exxon spokesman said the system is designed to speed transactions and increase the methods ofpayments available to customers. Some customers may be charged a transaction fee similar to those forusing a bank’s automatic teller machine.

The gasoline station systems work in a manner similar to automated teller machine transactions.Participating Exxon stations will have card readers that will allow customers to enter their secret codes tocomplete a transaction.

‘’Customers authorize transactions using their secret code, the same one used at MPact teller machines,’‘said Darwin Deason, chairman of MTech.

Once the purchase has been electronically authorized and completed, the funds are automaticallytransferred from the customer’s bank account to that of the oil company. ‘’The MPact debit card givescustomers a quick and easy means of paying for purchases from their checking accounts without havingto write a check,’‘ said Ray Hansen, Exxon’s western regional sales manager.

Exxon said purchases made with MPact cards will qualify for the four-cent-a-gallon discount given tocustomers who pay with cash. The oil company said it will continue to accept Exxon credit cards as wellas MasterCard and Visa cards.

Informate Example

Spectrum awarded contract by Grainger worth 2.5 million dollars for technology implementationto automate sales force 202 words 28 April 1993Business Wire English(Copyright (c) 1993, Business Wire)DALLAS—(BUSINESS WIRE)—Grainger, a division of W. W. Grainger Inc., has awarded SpectrumInformation Technologies, Inc. (Spectrum) (NASDAQ: NMS: SPCL) a contract to provide part of its salesforce with a computerized sales support tool that will improve responsiveness to customer needs andenhance the effectiveness of its account executives.

Under the agreement worth 2.5 million dollars, Spectrum’s subsidiary DATA ONE, is providing Graingerwith portable computer hardware, project integration services, and technical support services for salespersonnel. The program will be rolled out during the end of the second quarter.

Spectrum Information Technologies, Inc. is headquartered in Manhasset, N.Y., with facilities nationwide.



Spectrum develops and licenses wireless data transmission technologies through its subsidiary SpectrumCellular Corp. The company designs, markets and services portable communications and computingsystems as a systems integrator through its subsidiary DATA ONE. Spectrum is a distributor of portablecomputers through its subsidiary Computer Bay, which has the resources of 270 franchise locations.

CONTACT: Spectrum Information Technologies Inc., New York Kathy Bachand, 800/FOR-SPCL Peter T.Caserta, 516/627-8992 11:12 ET APR 28, 1993

Transform ExampleAmerican Greetings to Sell Cards Using the Internet 158 words 2 May 1995The Wall Street Journal B6 English(Copyright (c) 1995, Dow Jones & Co., Inc.) CLEVELAND — American Greetings Corp. said it will sell greeting cards on the Internet World Wide Webin an alliance with Oakton, Va.-based PC Flowers & Gifts Inc.

For $3.99 each, consumers can pick out a card, personalize it and type in the name and address of therecipient. Then the card is mailed by American Greetings. Consumers pay by entering their credit-cardnumbers.

American Greetings said the service is the first of its kind on the Internet World Wide Web. “While the saleof greeting cards in these on-line and electronic channels of distribution is minimal now, we realize that thisis an emerging market,” the company said. “By forming alliances with key players on the informationhighway, we are in a position to generate incremental sales and growth for the company in the future whenon-line services begin attracting more significant consumer usage.”

#01b the value relevance of announcements of transformational information technology investments. by...

Documents

strategic roles

results of previous

influence of itstrategic

investment announcements

firms makingtransformative

strategic role

investing firms stockprice

announcements andprovides