nep-ict New Economics Papers
on Information and Communication Technologies
Issue of 2005‒09‒29
nine papers chosen by
Walter Frisch
University Vienna

  1. Sourcing of Internal Auditing: An Empirical Study By Spekle, R.F.; Elten, H.J. van; Kruis, A.M.
  2. Startup firms' growth, management control systems adoption and performance By Davila, Toni; Foster, George
  3. CIO herds and user gangs in the adoption of open source software By Miralles, Francesc; Sieber, Sandra; Valor, Josep
  4. The organization and performance evaluation of R&D projects in a dynamic environment By Cassiman, Bruno; Guardo, Chiara di; Valentini, Giovanni
  5. Predicting Customer Loyalty Using The Internal Transactional Database By W. BUCKINX; G. VERSTRAETEN; D. VAN DEN POEL
  6. Credit and identity theft By Charles M. Kahn; William Roberds
  7. Past, Present and Future of the Telecommunications Industry By Pennings,Jacqueline; Kranenburg,Hans,van; Hagedoorn,John
  8. When are CRM Systems Successful? The Perspective of the User and of the Organization By Bruggen, G.H. van; Wierenga, B.
  9. Privacy Metrics and Boundaries By Pau, L-F.

  1. By: Spekle, R.F.; Elten, H.J. van; Kruis, A.M. (Erasmus Research Institute of Management (ERIM), RSM Erasmus University)
    Abstract: In recent years, the scope of internal auditing has broadened considerably, increasing the importance of internal auditing as part of the organization’s management control structure. This expanding role has changed the demands being put on internal auditors. Their new role requires different skills and competencies, and many organizations now need to face the choice whether to develop these broader competencies internally or to outsource internalauditing to outside service providers. This paper studies the factors associated with organizations’ internal audit sourcing decisions, building from a previous study by Widener & Selto (1999; henceforth W&S). In their study, W&S used Transaction Cost Economics (TCE) to explain the organization of internal auditing. Our study seeks to replicate their results, using newly collected data from 66 companies headquartered in the Netherlands. Our findings are supportive of W&S. Like W&S, we find asset specificity and frequency (both individually and in interaction) to be significantly associated with sourcing decisions in a regression model that explains 65% (adjusted R2 = 0.63) of the variance in outsourced internal auditing. Additional analyses reinforce the importance of these TCE variables in explaining organizations’ internal auditing sourcing behaviour.
    Keywords: Internal Auditing;Transaction Cost Economics;Make-or-buy Decision;
    Date: 2005–09–06
  2. By: Davila, Toni (IESE Business School); Foster, George (Stanford University)
    Abstract: Startup firms face a significant managerial challenge when they grow beyond the boundaries of informal interactions. This transition point has often been identified with a significant crisis in the growth path of these firms. An important aspect of this transition is the adoption of management control systems that leverage top management attention and provide the infrastructure to scale up the business model. Using a multi-method, multi-case field research design in a sample of 78 startup firms, we examine the relevance of the adoption of financial systems vis-à-vis other management control systems. We find that financial planning-including cash budget, operating budget and sales projections-are the earliest set of systems adopted. We also look at the association between the adoption of management control systems and startup firm growth. We model this association using a simultaneous equation specification to capture the theoretical arguments that posit the endogeneity of these variables. We find a positive and significant association in both equations among these variables. We further examine whether the often argued CEO replacement at this transition point is associated with the level of adoption of management control systems. We find that CEOs that have adopted fewer systems have shorter tenures. Taking advantage of the intimate knowledge that venture capital investors have about the management processes (and management systems in particular) of the firms they invest in, we examine the association between company valuation and the adoption of management control systems. We find evidence consistent with this association. Finally, we examine the association between the adoption of financial planning systems and the adoption of strategic and human resource planning systems.
    Keywords: management control systems; formal systems; professionalization; CEO tenure; startups;
    Date: 2005–07–25
  3. By: Miralles, Francesc (Universitat Pompeu Fabra); Sieber, Sandra (IESE Business School); Valor, Josep (IESE Business School)
    Abstract: Open Source Software (OSS) has received wide attention from the research community, analyzing both the innovation process of software development by distributed and unrelated teams, and the market dynamics at play between "free" and proprietary software. Up until now, OSS adoption has been irregular, although it seems to be breaking the dominance of existing players in some market segments. In this paper, we contend that due to the particularities of its development process, traditional ways of explaining IT adoption -rational decision making, technology diffusion models, and the psychology of the decision maker- are insufficient to explain the case of OSS diffusion. We believe that the existence of a strong and diffused development community leads to a new role of the user community, as both are intertwined. In addition, new concerns for social corporate responsibility and welfare create a new context, in which "user gangs" may exert some degrees of pressure on the IT decision maker. By analyzing some significant cases we depict under what conditions significant OSS adoption may unfold, showing that in two of the cases studied user gangs play a significant role. The resulting preliminary framework will inform future work, in which we aim at validating the emerging insights gained in this research.
    Keywords: Open source software; IT adoption; user communities; CIO herding;
    Date: 2005–06–17
  4. By: Cassiman, Bruno (IESE Business School); Guardo, Chiara di (University of Cagliari); Valentini, Giovanni (IESE Business School)
    Abstract: Faster technological development, shorter product life-cycles, and more intense global competition have transformed the current competitive environment for most firms. This new competitive landscape forces organizations to actively acquire knowledge, as a firm's competitive advantage is now more dependent on continuous knowledge development and enhancement. Therefore, knowledge has become a central theme in strategic management. Against this background, we argue that the knowledge characteristics of R&D projects are fundamental variables to explain governance decisions. Drawing upon the case of STMicroelectronics, we provide evidence that partnering or contracting with universities for innovation is common practice for developing new -original- knowledge, as opposed to applying existing knowledge, for solving a problem. However, the firm is more reluctant to partner, especially with another firm, when this knowledge directly enhances its competitiveness. Moreover, we find that R&D project performance is a bi-dimensional construct. One dimension picks up project efficacy and immediate benefits, while the other includes learning and long-term benefits. Though spanning firm boundaries for innovation does not seem to have appreciable effects on perceived project efficiency, it nonetheless brings about intertemporal benefits related to learning and capabilities development. In a dynamic environment, building knowledge may be more important than protecting it. Thus, an open innovation process may be an exceptionally effective way to build and develop the firm's technological future.
    Keywords: Innovation strategy; R&D projects' organization; R&D projects' performance; open innovation;
    Date: 2005–07–29
    Abstract: Loyalty and targeting are central topics in Customer Relationship Management. Yet, the information that resides in customer databases only records transactions at a single company, whereby customer loyalty is generally unavailable. In this study, we enrich the customer database with a prediction of a customer's behavioral loyalty such that it can be deployed for targeted marketing actions without the necessity to measure the loyalty of every single customer. To this end, we compare multiple linear regression with two state-of-the-art machine learning techniques (random forests and automatic relevance determination neural networks), and we show that (i) a customer’s behavioral loyalty can be predicted to a reasonable degree using the transactional database, (ii) given that overfitting is controlled for by the variable-selection procedure we propose in this study, a multiple linear regression model significantly outperforms the other models, (iii) the proposed variable-selection procedure has a beneficial impact on the reduction of multicollinearity, and (iv) the most important indicator of behavioral loyalty consists of the variety of products previously purchased.
    Keywords: Predictive modeling; customer relationship management; behavioral loyalty; overfitting; multicollinearity; data enrichment
    Date: 2005–08
  6. By: Charles M. Kahn; William Roberds
    Abstract: The quintessential crime of the information age is identity theft, the malicious use of personal identifying data. In this paper we model “identity” and its use in credit transactions. Various types of identity theft occur in equilibrium, including “new account fraud,” “existing account fraud,” and “friendly fraud.” The equilibrium incidence of identity theft represents a tradeoff between a desire to avoid costly or invasive monitoring of individuals on the one hand and the need to control transactions fraud on the other. Our results suggest that technological advances will not eliminate this tradeoff.
    Keywords: Identity theft
    Date: 2005
  7. By: Pennings,Jacqueline; Kranenburg,Hans,van; Hagedoorn,John (METEOR)
    Abstract: The telecommunications industry has experienced a series of dramatic changes since itsinception in the 1880s. Due to the latest liberalization and privatization wave in the world, the telecommunications industry has turned into a dynamic environment and is rapidly growing.In addition, the New Economy emerged and brought new technological developments in the1990s. They have stimulated the convergence of previously distinct industries such as thetelecommunications, information technology, entertainment, media, and consumerelectronics, into the so-called multimedia information industry. This study discusses the (de)regulation actions and their implications on the telecommunications industry as of its beginning. Furthermore, this study also presents a general overview of major trends in inter-firm partnerships and M&As in the telecommunications industry since 1985, examining both the general developments and the distribution according to internationalization and industries. We find that the overall trends demonstrated an increase in importance of inter-firm partnerships and M&As over time. Another significant finding is the increase in importance of other industries. In relative terms, the growth of M&As and alliances with partners outside the telecommunications industry superseded the increase in the number of M&A’s and alliances within the industry.
    Keywords: Strategy;
    Date: 2005
  8. By: Bruggen, G.H. van; Wierenga, B. (Erasmus Research Institute of Management (ERIM), RSM Erasmus University)
    Abstract: The individual impact of CRM systems is strongly related to impact at the organizational level. Fit with the task of the user is key. CRM systems are successful in organizations that reward customer-centric behavior and that have an analytical decision style. Acceptance of a CRM system should be monitored over time.
    Keywords: Customer Relationship Management;Marketing Management Support Systems;Survey Research;
    Date: 2005–09–08
  9. By: Pau, L-F. (Erasmus Research Institute of Management (ERIM), RSM Erasmus University)
    Abstract: This paper aims at defining a set of privacy metrics (quantitative and qualitative) in the case of the relation between a privacy protector ,and an information gatherer .The aims with such metrics are: -to allow to assess and compare different user scenarios and their differences; for examples of scenarios see [4]; -to define a notion of privacy boundary, and design it to encompass the set of information, behaviours, actions and processes which the privacy protector can accept to expose to an information gathering under an agreement with said party; everything outside the boundary is not acceptable and justifies not entering into the agreement; -to characterize the contribution of privacy enhancing technologies (PET). A full case is given with the qualitative and quantitative privacy metrics determination and envelope, i.e. a Cisco Inc. privacy agreement.
    Keywords: Privacy;Metrics;Set theory;Economics;Case;Privacy enhancing technologies;
    Date: 2005–04–03

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