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In today's global electronics industry, lead firms and suppliers of key components capture greater value than contract manufacturers. Using data from the Taiwanese Stock Exchange from 2002 to 2009, this research aims to examine if the pattern of value capture in the global electronics industry holds for Taiwan. We also test the impacts of research and development (R&D) spending on firm profitability and returns. Our results show that lead firms and component suppliers capture higher gross profits from their R&D spending, compared to contract manufacturers. However, contract manufacturers have higher return on equity. Component suppliers' return to R&D as measured by return on equity is lower than contract manufacturers. These findings suggest that component suppliers capture higher profits as lead firms do, but the cost of R&D for component suppliers is so high that their returns on investment are not as great as contract manufacturers. This also suggests that Taiwanese component suppliers are unable to create entry barriers or gain pricing power from their R&D investments. © 2013 © 2013 Taylor & Francis.

Previous research has found that information technology (IT) investment is associated with significant productivity gains for developed countries but not for developing countries. Yet developing countries have continued to increase their investment in IT rapidly. Given this apparent disconnect, there is a need for new research to study whether the investment has begun to pay off in greater productivity for developing countries. We analyze new data on IT investment and productivity for 45 countries from 1994 to 2007, and compare the results with earlier research. We find that upper-income developing countries have achieved positive and significant productivity gains from IT investment in the more recent period as they have increased their IT capital stocks and gained experience with the use of IT. We also find that the productivity effects of IT are moderated by country factors, including human resources, openness to foreign investment, and the quality and cost of the telecommunications infrastructure. The academic implication is that the effect of IT on productivity is expanding from the richest countries into a large group of developing countries. The policy implication is that lower-tier developing countries can also expect productivity gains from IT investments, particularly through policies that support IT use, such as greater openness to foreign investment, increased investment in tertiary education, and reduced telecommunications costs. © 2013 M.E. Sharpe, Inc. All rights reserved.

This research asks who captures the greatest value in the global electronics industry by testing the concept of the "smiling curve", which predicts that the greatest value is captured by upstream and downstream firms, and the lowest value is captured in the middle of the value chain. We test the concept using the Electronic Business 300 data-set for 2000-2005. We find that lead firms and component suppliers earn higher gross margins and net margins compared to contract manufacturers. However, the differences are minimal for return on assets (ROA) and return on equity (ROE). We also find that active component suppliers gain higher profits than passive component suppliers. These findings suggest that the smiling curve is right if value is defined in terms of gross margins, but the cost of sustaining a position on either end of the curve is so high that returns on investment are similar across the curve. © 2012 Copyright Taylor and Francis Group, LLC.

Offshore sourcing of IT development has grown rapidly in the past decade. Yet some firms are much more active than others in offshore sourcing, and some report greater success in offshore performance. This raises two questions. First, how can we explain differences in firm sourcing choices, even among firms operating in the same industry? Second, what factors influence the impact of offshore sourcing on firm performance?We use data from a 2010 survey of U.S. software companies to analyze the factors that influence global sourcing decisions and the impacts of offshore sourcing on firm performance. We first examine the factors that shape sourcing choices for all firms, those that offshore and those that do not. We then focus on only those firms that offshore, examining both the determinants of offshoring and the performance outcomes of offshoring for firms with different strategies.The most important contribution of this analysis is the finding that there are two types of offshoring strategic motivation, as identified through factor analysis. One is operational improvement and the other is international market expansion. These differences in strategy are significantly associated with the choice of sourcing options, and with the cost savings achieved from offshoring. It appears that firms motivated by cost reduction are more likely to use the outsourcing option rather than setting up their own captive development centers, while those motivated by market expansion are more likely to use captive development. Firms that go offshore for operations reasons report greater cost reduction than those that go for market access.

The supply chains of the mobile phone industry span national and firm boundaries. To analyze how value is distributed among the participants, a framework based on theories of firm strategy is applied, and a novel methodology is used to measure value capture in three phone models introduced from 2004 to 2008. The research shows that carriers capture the greatest value (in terms of gross profit) from each handset, followed closely by handset makers, with suppliers a distant third. However, the situation is reversed in terms of operating profit. Carriers shoulder the burden of network installation, maintenance, and upgrading, which absorbs much of the value from their subscription fees. Handset maker nationality, which may also influence supplier choice, is a key determinant of the geographic distribution of value capture. The results are also used to estimate the relationship of handset subsidies to carrier profits, which has been an issue of concern for antitrust authorities in several countries. The analysis shows how the framework can be used to calculate how much service charges might be inflated to cover the subsidies. © 2011 Elsevier Ltd. All rights reserved.

In order to understand the potential for creating economic value from alternative energy, there is a need for detailed empirical research on the global structure of those industries.  As one step in this direction, we have conducted research aimed at answering the question:  Who captures value in the global wind energy industry supply chain?  There are a number of potential measures of value that are important to firms, countries, workers, shareholders and others.  These include jobs, wages and profits.  In this case, we focus on financial value in the form of profits to firms.

This study applies concepts about computerization movements (CMs) to a case study of the diffusion of innovation in the developing world and thereby to draw lessons for undertaking similar technology projects. We identify the key characteristics of a computerization movement in the scholarly literature and then review the One Laptop Per Child (OLPC) Project in terms of each, identifying where OLPC adds new understanding about CMs. The OLPC project is an example of a computerization movement that has launched a new generation of low-cost computers in the developing world, while failing in its own ambitious goals. The OLPC project provides insights into the nature of computerization movements, in particular the process of mobilization, the diffusion of innovations in the developing world, and the overlap of multiple movements. OLPC's limited success to date illustrates the importance of having: (1) financial resources beyond deployment for economic sustainability, (2) local skills, infrastructure and deployment capability for operational sustainability, and (3) a replicable and scalable deployment model for ease of implementation across many sites. © 2011 IEEE.

Nicholas Negroponte presents the idea of One Laptop Per Child (OLPC), a $100 PC that can transform education for the world's disadvantaged school children. The nonprofit OLPC project involves $20 million in startup investment, sponsorships and partnerships with major IT industry players, and interest from developing countries. Some developing countries are deploying OLPC laptops, while some have cancelled the deployments on the results of pilot projects. The OLPC organization (www.olpc.com) is also struggling with key staff defections, budget cuts, and ideological disillusionment. OLPC is also motivating the PC industry to develop lower-cost, education-oriented PCs, and providing developing countries with low-cost computing options along with its own innovation. OLPC also has developed a novel technology, the XO laptop, with a focus on the needs of students in poor rural areas.

In today's global electronics industry, innovation is carried out by various value chain participants, including brand-name manufacturers (sometimes called lead firms), contract manufacturers and component suppliers, but there is little understanding of who benefits most from innovation in such networks. This research examines empirically the relationship of R&D spending and location in the value chain (lead vs. non-lead firms) to firm performance in the global electronics industry by using the Electronic Business 300 data set for 2000-2005. Our results show that firms spending more on R&D have higher gross profits, but do not have higher return on equity (ROE) and return on assets (ROA). There is a strong positive relationship between lead firms and performance as measured by gross profit, ROE and ROA, but the relationship between lead firms and gross profit becomes insignificant when the interaction term of R&D and lead firm is included in the analysis. Finally, lead firm status has a positive interaction effect on the relationship between R&D and gross profit. These findings suggest that the relationship of R&D to performance is mixed, but that lead firms can capture higher value (gross profit) from R&D than contract manufacturers and component suppliers. © 2009 Taylor & Francis.

Investment in information technology (IT) is an important driver of economic growth and productivity in the United States and other developed countries, but as yet it is not shown to be a significant driver in developing countries. Previous research suggests that IT investment and complementary assets are insufficient for developing countries to realize economic benefits. This research note examines the factors that influence IT investment in developed and developing countries to determine how greater investment might be stimulated to achieve productivity gains. We use the flexible accelerator model of investment and find that it is a good predictor of country-level IT investment. We also extend the model to include country-level variables, and find a negative relationship between IT investment and interest rates, but positive and significant relationships between investment, openness to trade, and telecommunications infrastructure. When we include interaction effects between national income levels and country variables, we find that the impacts of interest rates, size of the financial sector, teledensity, and intellectual property rights are strongest in shaping IT investment for developed countries. In contrast, we find that the impact of openness to trade is greater for developing countries, as is the size of government and education levels. © 2007 INFORMS.

A conceptual model of various factors that could explain the differences among countries in the adoption of e-commerce is presented. Firms' technology adoption decisions and output growth depend upon the efficiency of the capital markets, which diversify the risks of adopting new technologies and thus encourage early adoption of e-commerce. Countries with an active direct marketing industry experience higher levels of e-commerce activities because companies do not need to educate customers about the nature of the remote purchases. The development of e-commerce may be slow in countries without strong and effectively enforced commercial laws, despite having the necessary conditions to accelerate e-commerce.

This article develops and tests a model examining the relationship between firm globalization, scope of e-commerce use, and firm performance, using data from a large-scale cross-country survey of firms from three industries. We find that globalization leads to both greater scope of e-commerce use and improved performance, measured as efficiency, coordination, and market impacts. Scope of e-commerce use also leads to greater firm performance of all three types. Globalization has differential effects on B2B and B2C e-commerce, however, such that highly global firms are more likely to do B2B but less likely to do B2C. Our findings provide support for Porter's (1986) thesis that upstream business activities (namely, B2B) are more global while downstream business activities (B2C) are more local or multidomestic. Copyright © Taylor & Francis Inc.

Grounded in the technology-organization-environment (TOE) framework, we develop a research model for assessing the value of e-business at the firm level. Based on this framework, we formulate six hypotheses and identify six factors (technology readiness, firm size, global scope, financial resources, competition intensity, and regulatory environment) that may affect value creation of e-business. Survey data from 612 firms across 10 countries in the financial services industry were collected and used to test the theoretical model. To examine how e-business value is influenced by economic environments, we compare two subsamples from developed and developing countries. Based on structural equation modeling, our empirical analysis demonstrates several key findings: (1) Within the TOE framework, technology readiness emerges as the strongest factor for e-business value, while financial resources, global scope, and regulatory environment also significantly contribute to e-business value. (2) Firm size is negatively related to e-business value, suggesting that structural inertia associated with large firms tends to retard e-business value. (3) Competitive pressure often drives firms to adopt e-business, but e-business value is associated more with internal organizational resources (e.g., technological readiness) than with external pressure to adopt. (4) While financial resources are an important factor in developing countries, technological capabilities become far more important in developed countries. This suggests that as firms move into deeper stages of e-business transformation, the key determinant of e-business value shifts from monetary spending to higher dimensions of organizational capabilities. (5) Government regulation plays a much more important role in developing countries than in developed countries. These findings indicate the usefulness of the proposed research model and theoretical framework for studying e-business value. They also provide insights for both business managers and policy-makers. © 2004 M.E. Sharpe, Inc.

For many years, there has been considerable debate about whether the IT revolution was paying off in higher productivity. Studies in the 1980s found no connection between IT investment and productivity in the U.S. economy, a situation referred to as the productivity paradox. Since then, a decade of studies at the firm and country level has consistently shown that the impact of IT investment on labor productivity and economic growth is significant and positive. This article critically reviews the published research, more than 50 articles, on computers and productivity. It develops a general framework for classifying the research, which facilitates identifying what we know, how well we know it, and what we do not know. The framework enables us to systematically organize, synthesize, and evaluate the empirical evidence and to identify both limitations in existing research and data and substantive areas for future research. The review concludes that the productivity paradox as first formulated has been effectively refuted. At both the firm and the country level, greater investment in IT is associated with greater productivity growth. At the firm level, the review further concludes that the wide range of performance of IT investments among different organizations can be explained by complementary investments in organizational capital such as decentralized decision-making systems, job training, and business process redesign. IT is not simply a tool for automating existing processes, but is more importantly an enabler of organizational changes that can lead to additional productivity gains. In mid-2000, IT capital investment began to fall sharply due to slowing economic growth, the collapse of many Internet-related firms, and reductions in IT spending by other firms facing fewer competitive pressures from Internet firms. This reduction in IT investment has had devastating effects on the IT-producing sector, and may lead to slower economic and productivity growth in the U.S. economy. While the turmoil in the technology sector has been unsettling to investors and executives alike, this review shows that it should not overshadow the fundamental changes that have occurred as a result of firms' investments in IT. Notwithstanding the demise of many Internet-related companies, the returns to IT investment are real, and innovative companies continue to lead the way. © 2003 ACM.

Information systems are strategic to the extent that they support a firm's business strategy. Cisco Systems has used the Internet and its own information systems to support its strategy in several ways: (1) to create a business ecology around its technology standards; (2) to coordinate a virtual organization that allows it to concentrate on product innovation while outsourcing other functions; (3) to showcase its own use of the Internet as a marketing tool. Cisco's strategy and execution enabled it to dominate key networking standards and sustain high growth rates throughout the 1990s. In late 2000, however, Cisco's market collapsed and the company was left with billions of dollars in unsold inventory, calling into question the ability of its information systems to help it anticipate and respond effectively to a decline in demand. © 2002 Elsevier Science B.V.