Which IT investments benefit the bottom line
Investment in IT has more of an impact on firm profitability than either advertising
or research and development, according to a study by Sunil Mithas, assistant professor
of decision, operations and information technology. The study uses proprietary,
archival data from more than 400 global firms collected over a six years. “IT investments”
include all hardware, software, personnel, training, disaster recovery, facilities,
and costs associated with supporting the IT environment, from servers and desktop
machines to help desk staff.
IT investments to support sales growth—customized offerings, new marketing channels
to promote awareness of the company’s products and services, improvements in the
way firms manage customer lifecycles—had a big positive impact on a firm’s bottom
The pathways leading to profitability aren’t always compatible, so knowing the
impact of an IT investment can help managers make savvy choices among discretionary
expenditures. “This is a question of interest to many in the business world—what
really affects firm profitability?” says Mithas. “We can now be sure that IT does
impact firm profitability, and our findings suggest that its effect is greater than
that of R&D or advertising.”
“Information Technology and Firm Profitability: Mechanisms and Empirical Evidence”
was published the March 2012 MIS Quarterly.
Facebook creates jobs
The proliferation of Facebook and mobile technology applications has spawned
an entirely new industry – dubbed the “App Economy” — that added at least 182,000
new jobs to the U.S. economy in 2011. Il-Horn Hann and Siva Viswanathan, co-directors
of the Center for Digital Innovation, Technology and Strategy and associate professors
of information systems, measured the number of people employed to build, develop
and consult on Facebook applications using data provided by Facebook.
The App Economy has also led to job creation at businesses that supply app developers,
and in sectors that reap the benefits of increased household spending by app developers
and suppliers from new app economy jobs. Hann and Viswanathan conducted an economic
impact analysis to estimate that between 129,000 to more than 182,000 people are
employed in jobs supported by the app economy.
The researchers calculated the sum of wages and benefits earned by those employed
in and supported by the app economy total between $12.19 billion to $15.71 billion.
“Our findings confirm that social media platforms have created a thriving new
industry,” said Hann. “As Facebook and other platforms grow, we will continue to
see job growth and the ripple effects of these advances in the U.S. economy.”
The results of the study are published in a white paper available on the
Identifying difficult employees
Cynthia Kay Stevens, associate professor of management and organization at the
Smith School, studied “difficult co-workers” and their behaviors in the workplace.
Difficult employees create inefficiencies when others have to pick up their slack,
create work-arounds, or become distracted by the situation. Performance declines
can lead to lost revenue for the organization, damaged client relations and employee
So what’s the difference between a colleague who is simply irritating and one
who is truly difficult? Signs to watch for include intimidation, sarcasm or personal
attacks; poor communication style; micromanaging on the one hand or inadequate oversight
on the other; emotional displays; unethical behaviors; and of course sub-par work
For managers dealing with “difficult” employees, Stevens recommended meeting
with team members to fully understand the level of the problem and document the
consequences of the difficult co-worker’s behavior. That information can be used
to confront the difficult person with constructive advice and solutions for improvement,
and to set goals for which the employee can be held accountable.
This research is from a working paper delivered at the 2011 Academy of Management
Your cellphone makes you selfish
Using a cell phone—even thinking about using a cell phone—makes you more selfish,
according to a series of studies from Rosallina Ferraro and Anastasiya Pocheptsova,
both assistant professors of marketing.
In the experiments, some participants used their cellphones for a few minutes
and others used a toy, and then asked how much they would have to be paid to participate
in a second study. In another study, participants used their cell phones or Facebook
for three minutes, and were then told that a local charity was looking for help
and asked if they would be willing to volunteer. In both studies, those who used
their cell phones were more self-focused and less likely to offer their time to
This self-centered point of view held true even when participants were merely
asked to draw a picture of their cellphones and think about how they used them.
“Cellphones seem to function as a part of you, as an extension of yourself,”
says Ferraro. “In many ways it’s like a physical extension as well as a psychological
extension of who you are, more so than Facebook or other programs you might use.”
This research is from a working paper.