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A partial adjustment approach to evaluating and measuring the business value of information technology

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  • Lin, Winston T.
  • Chuang, Chia-Hung
  • Choi, Jeong Hoon

Abstract

In this paper we develop a partial adjustment approach, based on the theory of partial adjustment, to assess the value of information technology. We also propose a performance measure derived from the approach. The constrained (structural or implicit) and unconstrained (non-structural or explicit) models derived from the approach are fitted into a set of panel data at the country level, covering the period from 1993 to 2006 for a sample of 12 countries including the G7 nations; and are estimated by the seemingly unrelated regression estimation. The results produced by the models are robust with respect to the choice of the production function representing the true (desired or maximum) output and challenge the widely held belief that the productivity paradox has disappeared and the view that the productivity paradox exists in developing economies only. The proposed approach compares favorably with the time-varying stochastic production frontier approach since it is easier and simpler to apply. But, unlike the non-parametric data envelopment analysis approach, it is parametric.

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  • Lin, Winston T. & Chuang, Chia-Hung & Choi, Jeong Hoon, 2010. "A partial adjustment approach to evaluating and measuring the business value of information technology," International Journal of Production Economics, Elsevier, vol. 127(1), pages 158-172, September.
    • Handle: RePEc:eee:proeco:v:127:y:2010:i:1:p:158-172
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    References listed on IDEAS

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    1. Lin, Winston T. & Chen, Yueh H. & Chou, Chia-Ching, 2021. "Assessing the business values of e-commerce and information technology separately and jointly and their impacts upon US firms' performance as measured by productive efficiency," International Journal of Production Economics, Elsevier, vol. 241(C).
    2. Lin, Winston T. & Chen, Yueh H. & Shao, Benjamin B.M., 2015. "Assessing the business values of information technology and e-commerce independently and jointly," European Journal of Operational Research, Elsevier, vol. 245(3), pages 815-827.
    3. Zhiguang Zhang & Haiqing Hu & Xin Zhao & Yangrui Bai, 2022. "Dynamic Influences of FDI and R&D Expenditures on IT Business Value: An Empirical Test from China," Sustainability, MDPI, vol. 14(17), pages 1-16, September.
    4. (Daniel) Kao, Ta-Wei & Su, Hung-Chung & Chen, Yi-Su, 2019. "The curvilinear relationships between structural embeddedness and productive efficiency: An exploratory study," International Journal of Production Economics, Elsevier, vol. 212(C), pages 176-185.
    5. Lin, Winston T. & Chen, Yueh H. & Hung, TingShu, 2019. "A partial adjustment valuation approach with stochastic and dynamic speeds of partial adjustment to measuring and evaluating the business value of information technology," European Journal of Operational Research, Elsevier, vol. 272(2), pages 766-779.
    6. Winston T. Lin, 2013. "Assessing the impacts of the integration of the ICT investments of Taiwan and China upon economic growth in Taiwan," Chapters, in: Peter C.Y. Chow (ed.), Economic Integration Across the Taiwan Strait, chapter 3, pages 56-80, Edward Elgar Publishing.
    7. Cave, Joshua & Chaudhuri, Kausik & Kumbhakar, Subal C., 2023. "Dynamic firm performance and estimator choice: A comparison of dynamic panel data estimators," European Journal of Operational Research, Elsevier, vol. 307(1), pages 447-467.
    8. Lin, Winston T. & Chuang, Chia-Hung, 2013. "Investigating and comparing the dynamic patterns of the business value of information technology over time," European Journal of Operational Research, Elsevier, vol. 228(1), pages 249-261.
    9. Zhiguang ZHANG & Haiqing HU & Winston T. LIN, 2019. "Analyzing the Impacts of Unobserved National Characteristics on Economic Performance of Information Technology based on a Partial Adjustment Approach With Dynamic and Variable Speed of Adjustment," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(1), pages 128-142, March.
    10. Lin, Winston T. & Kao, Ta-Wei (Daniel), 2014. "The partial adjustment valuation approach with dynamic and variable speeds of adjustment to evaluating and measuring the business value of information technology," European Journal of Operational Research, Elsevier, vol. 238(1), pages 208-220.
    11. Silva, Elvira & Lansink, Alfons Oude & Stefanou, Spiro E., 2015. "The adjustment-cost model of the firm: Duality and productive efficiency," International Journal of Production Economics, Elsevier, vol. 168(C), pages 245-256.
    12. Lin, Winston T. & Chiang, Chung-Yean, 2011. "The impacts of country characteristics upon the value of information technology as measured by productive efficiency," International Journal of Production Economics, Elsevier, vol. 132(1), pages 13-33, July.

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