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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.

This paper studies the cross-country diffusion of personal computers (PCs) and the Internet, and examines how the diffusive interactions across these technologies affect the evolution of the global digital divide. We adopt a generalized diffusion model that incorporates the impact of one technology's installed base on the diffusion of the other technology. We estimate the model on data from 26 developing and developed countries between 1991 and 2005. We find that the codiffusion effects between PCs and the Internet are complementary in nature and the impact of PCs on Internet diffusion is substantially stronger in developing countries as compared to developed ones. Furthermore, our results suggest that these codiffusive effects are a significant driver of the narrowing of the digital divide. We also examine the policy implications of our results, especially with respect to how complementarities in the diffusion of PC and Internet technologies might be harnessed to further accelerate the narrowing of the global digital divide. © 2010 INFORMS.

Prior research at the firm level finds information technology (IT) to be a net substitute for both labor and non-IT capital inputs. However, it is unclear whether these results hold, given recent IT innovations and continued price declines. In this study we extend prior research to examine whether these input relationships have evolved over time. First, we introduce new price indexes to account for varying technological progress across different types of IT hardware. Second, we use the rental price methodology to measure capital in terms of the flow of services provided. Finally, we use hedonic methods to extend our IT measures to 1998, enabling analysis spanning the emergence of the Internet. Analyzing approximately 9,800 observations from over 800 Fortune 1,000 firms for the years 1987-1998, we find firm demand for IT to be elastic for decentralized IT and inelastic for centralized IT. Moreover, Allen Elasticity of Substitution estimates confirm that through labor substitution, the increasing factor share of IT comes at the expense of labor. Last, we identify a complementary relationship between IT and ordinary capital, suggesting an evolution in this relationship as firms have shifted to more decentralized organizational forms. We discuss these results in terms of prior research, suggest areas of future research, and discuss managerial implications. © 2010 INFORMS.

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.

In only ten years, Google has achieved remarkable success from online search-based advertising. Its search engine is dominant, and its IT infrastructure is the most powerful computing system in the world running on over one million computers and serving more than one billion users globally. Google makes money by using its search engine to deliver online advertising alongside responses to user searches for information, goods, maps, directions, and a host of other services. Its capabilities make it likely to become the world's first information utility - a concept similar to electric utilities that provide services to many corporations and individuals alike. Constant innovation is the key to Google's success and offers lessons for other companies: hire talented people, have them work in small teams, and give them freedom to excel, but use a rigorous data-based approach to evaluating results and making course adjustments.

This paper presents a discussion of design considerations for community web portals as social networking systems. We analyse and compare the social interaction approach, design considerations and socio-technical requirements with regards to community portal technology employed in two master-planned urban developments in Australia and Mexico. We focus on how the human and social concepts and local contextualisations affect technology design and use. In response to our analysis, and to face the challenge of designing for variability and diversity, we present the communicative ecology model as a conceptual tool to help researchers and designers grasp the situated context and purpose of these systems in order to inform the design and development of better community technology.

Although research has made significant strides in recent years in evaluating the performance impacts from information technology (IT), a dearth of easily accessible objective measures, particularly at the process level, continues to limit IT research. Suggestions that researchers use perceptual measures instead are met with claims that the biased nature of perceptions renders them imperfect proxies for the true extent of IT impacts. In this paper, we use sensemaking theory to explore this claim. We outline a model relating what executives notice about process-level IT impacts with sensemaking-based perceptions of IT impacts at the firm level, and firm performance as the ultimate arbiter of perceptual accuracy. Estimating the model with survey data from executives in 196 firms, we find that executives' perceptions are more fact than fiction. While perceptions are not a perfect proxy for hard-to-find objective measures, perceptual accuracy should stimulate greater consideration of executives' perceptions in future IT business value research. © 2007 M.E. Sharpe, Inc.

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.

The use of personal computers and Internet at home is becoming more and more common in some developing countries such as Mexico, where affordable prices and credit plans have contributed to this trend. Undoubtedly, the presence of information technology in the households has effects in the life of families and their communities; however how beneficial these effects are depends on the way technology is contextualized to support domestic and community practices. Achieving a proper contextualization is the goal of what we call habitat computing. This paper presents the case of Real del Sol, a housing community in Mexico where an implementation of habitat computing is being developed. Houses are built with Internet access and personal computers as part of their basic infrastructure. We analyze here the role, usage and development of the Real del Sol community intranet, which is a key element on supporting the vision of the project. © Springer-Verlag Berlin Heidelberg 2007.

Grounded in the diffusion of innovation theory and the technology- organization-environment framework, we develop an integrative model to study the determinants of post-adoption stages of innovation diffusion, using enterprise digital transformation as an example of technology-enabled innovations. We specify four innovation characteristics (relative advantage, compatibility, costs and security concern) and four contextual factors (technology competence, organization size, competitive pressure and partner readiness) as determinants of post-adoption usage, and postulate usage as an intermediate link to impact on firm performance. We test the proposed model using a dataset of 1415 companies from six European countries. We find that the innovation needs to be used extensively in value-chain activities before its impact can be realized. Among the innovation characteristics, we find that compatibility is the strongest driver, and security concern outweighs cost as a usage inhibitor. Among the contextual variables, technology competence, partner readiness and competitive pressure significantly drive e-business usage, and the structural inertia of large firms tends to slow down its penetration. Collectively, these results indicate that innovation diffusion can be better understood by including both innovation characteristics and contextual factors, whereas earlier literature has traditionally treated the two separately. Finally, we evaluate an international dimension among European countries and tease out important boundary conditions that would not have been evident in a single-country dataset. Our results show that careful attention must be paid to the economic and regulatory factors that may result in uneven innovation diffusion even among developed European countries. © 2006 Operational Research Society Ltd. All right reserved.

This paper extends our previous studies on the assimilation of Internet-based e-business innovations by firms in an international setting. Drawing upon theories on the process and contexts of technology diffusion, we develop an integrative model to examine three assimilation stages: initiation → adoption → routinization. The model features technological, organizational, and environmental contexts as prominent antecedents of this three-stage assimilation process. Based on this model, we hypothesize how technology readiness, technology integration, firm size, global scope, managerial obstacles, competition intensity, and regulatory environment influence e-business assimilation at the firm level. A unique data set of 1,857 firms from 10 countries is used to test the conceptual model and hypotheses. To probe deeper into the influence of the environmental context, we compare two subsamples from developed and developing countries. Our empirical analysis leads to several key findings: (1) Competition positively affects initiation and adoption, but negatively impacts routinization, suggesting that too much competition is not necessarily good for technology assimilation because it drives firms to chase the latest technologies without learning how to use existing ones effectively. (2) Large firms tend to enjoy resource advantages at the initiation stage, but have to overcome structural inertia in later stages. (3) We also find that economic environments shape innovation assimilation: Regulatory environment plays a more important role in developing countries than in developed countries. Moreover, while technology readiness is the strongest factor facilitating assimilation in developing countries, technology integration turns out to be the strongest in developed countries, implying that as e-business evolves, the key determinant of its assimilation shifts from accumulation to integration of technologies. Together, these findings offer insights into how innovation assimilation is influenced by contextual factors, and how the effects may vary across different stages and in different environments. © 2006 INFORMS.

The factors leading to variations in e-business use among U.S. firms are identified. Building on diffusion of innovation theory, an integrated model is developed that explains the relative influence of eight known determinants. Diversity and volume of e-business use are empirically investigated using a sample of 294 firms. The analysis demonstrates that (1) considering the diversity of e-business use, pressure from trading partners is the most important driver, (2) when e-business volume is investigated, government pressure emerges as the strongest factor, (3) government promotion may not have much effect on the diversity of e-business use by private companies, but does significantly influence the volume of e-business use by firms doing business with the government, and (4) the United States has a positive regulatory environment for supporting e-business. Taken together, these findings on the multidimensionality of e-business use show that diversity and volume are not only different measures of e-business use, but also have different determinants. The integrated model provides a more comprehensive explanation of e-business use and could serve as a foundation for future research on interorganizational systems. Copyright © 2006 M.E. Sharpe, Inc. All rights reserved.

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 innovation diffusion literature and the resource-based theory, this paper develops an integrative research model for assessing the diffusion and consequence of e-business at the firm level. Unlike the typical focus on adoption as found in the literature, we focus on postadoption stages, that is, actual usage and value creation. The model thus moves beyond dichotomous "adoption versus nonadoption" and accounts for the "missing link" - actual usage - as a critical stage of value creation. The model links technological, organizational, and environmental factors to e-business use and value, based on which a series of hypotheses are developed. The theoretical model is tested by using structural equation modeling on a dataset of 624 firms across 10 countries in the retail industry. To probe deeper into whether e-business use and value are influenced by economic environments, two subsamples from developed and developing countries are compared. The study finds that technology competence, firm size, financial commitment, competitive pressure, and regulatory support are important antecedents of e-business use. In addition, the study finds that, while both front-end and back-end capabilities contribute to e-business value, back-end integration has a much stronger impact. While front-end functionalities are becoming commodities, e-businesses are more differentiated by back-end integration. This is consistent with the resource-based theory because back-end integration possesses the value-creating characteristics of resources (e.g., firm specific, difficult to imitate), which are strengthened by the Internet-enabled connectivity. Our study also adds an international dimension to the innovation diffusion literature, showing that careful attention must be paid to the economic and regulatory factors that may affect technology diffusion across different countries. © 2005 INFORMS.

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.