Information-Technology Investment Decisions: When Do Costs and Benefits in the Social Subsystem Matter?

Abstract

The inclusion of social subsystem costs and benefits in information technology (IT) investment choices has been a difficult problem for IT decision-makers. Past research has shown that although some organizations adequately and consistently consider social subsystem issues when making IT investment decisions, many do not. This demonstrates a discrepancy between prescriptive theory and descriptive evidence. Our study addresses this theory-practice disconnection by investigating which firms, and under what conditions IT investments are likely to follow or violate prescriptions. Data collected from a national sample of 200 firms shed light on the firm and situational factors that affect the consideration of social subsystem issues during the IT investment decision process. The amount of social subsystem disruption associated with the IT in question, the strategic relevance of the IT to the organization, and the firm's continuous-learning culture each have direct or interactive influences on the decision process. Specifically, they impact the consideration of social subsystem costs and benefits for IT investments. Organizational size and industry are unrelated to this facet of decision-making. Overall, the empirical results help us better understand (1) what kinds of IT decisions cause stronger evaluation of social subsystem costs and benefits, (2) what types of firms give the greatest consideration to these issues, and (3) which intangible social subsystem costs or benefits are seen as the most important.

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