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Journal of Organizational Computing and Electronic Commerce 12

Editors:Andrew B. Whinston
Dates:2002
Volume:12
Publisher:Lawrence Erlbaum Associates
Standard No:ISSN 1054-1721
Papers:14
Links:Table of Contents
  1. JOCEC 2002 Volume 12 Issue 1
  2. JOCEC 2002 Volume 12 Issue 2
  3. JOCEC 2002 Volume 12 Issue 3

JOCEC 2002 Volume 12 Issue 1

Introduction to the Special Issue on Advances in Research on Information Technologies in the Financial Services Industry BIB 1-4
  Robert J. Kauffman; Bruce W. Weber
Assessing the Business Value of Information Technology in Global Wholesale Banking: The Case of Trade Services BIBA 5-16
  Prabu Davamanirajan; Tridas Mukhopadhyay; Charles H. Kriebel
The investment in information technologies (IT) in the financial services sector has proliferated in the last decade. Yet there is very little research examining the impact of IT in the financial services sector. In this article, we focus on the trade services application in global wholesale banking. We use the production function approach to estimate the impact of IT in this application. Our estimate of the output elasticity of IT is positive and statistically significant. In addition, we find that the return on investment of IT (increase in dollar revenue per dollar spent in IT) is about 100% per year, holding labor input constant. Our study provides one instance of direct evidence that IT has a favorable impact on productivity in the financial services sector.
Measuring the Business Value of IT Investments: Inferences From a Study of a Senior Bank Executive BIBA 17-38
  Ken Peffers; Timo Saarinen
Evaluating investments in information technology (IT) is very important for senior managers in the financial services industry, but is problematic because the direct benefits of such investments are difficult to link to organizational goals. Performance impacts are often difficult to quantify, either as expected benefits of proposed investments or realized value of implemented systems. A study of 105 CEOs and other senior bank executives reveals that bank executives use some of an expected set of concepts to evaluate IT investments but not others. Fewer bankers use evaluation concepts after implementation than before, but executives who see IT investments as "strategic" use the concepts more consistently, ex ante and ex post. Consistent use of evaluation concepts for ex ante and ex post evaluation contributes to satisfaction with the evaluation process. Correlations between satisfaction measures and perspectives on the role of IT in the firm suggest that executives who see IT investments in terms of cost cutting or strategic necessity are more satisfied with the evaluation process than those who view such investments in terms of strategic advantage.
Using Inductive Learning to Predict Bankruptcy BIBA 39-57
  James A. Gentry; Michael J. Shaw; Antoinette C. Tessmer; David T. Whitford
An emerging trend in organizational computing is using information technology to learn decision knowledge from enterprise data. The primary contribution of this study is the presentation of a sound theory and a comprehensive technique for learning the decision model for predicting bankruptcy. The theory is based on the information contained in cash flow components, which is the foundation of valuation theory, and an analytical system that measures the amount of uncertainty in the cash flow information. The approach links a tree-based inductive learning system that relies on the concept of entropy, with an information system based on the cash flow of a firm. A test of the cash flow approach involves the cash flow components for a sample of 99 failed and 99 non-failed companies. The structural instability of cash flow components generated by an inductive learning system is a serious issue for financial analysts. However, this shortcoming is overcome by using a jackknife procedure to develop a global tree that identifies the most important cash flow components. The final global tree found only 3 cash flow components were needed to classify correctly 89% of the companies as either failed or non-failed. Only a few early studies achieved a higher level of predictive accuracy. The 3 significant cash flow components were dividends, net investment, and net operating cash flow. Using the same data, a probit statistical technique generated a 67.5% predictive accuracy. In summary, the inductive learning results indicate that cash flow components are not only a natural tool for explaining the bankruptcy process, but they provide a high level of predictive accuracy.
The Network Externalities Hypothesis and Competitive Network Growth BIBA 59-83
  Robert J. Kauffman; Yu-Ming Wang
Building on an installed base model of network adoption in the economics literature, this article examines the impact of network externalities in the context of nationally shared electronic banking networks. We develop a decision framework for analyzing the situation in which banking firms, facing a choice between two networks, choose when to adopt to maximize their net benefits flow. We assess the impact of a move to network transaction switching called duality, a strategic decision to create technological compatibility between the networks. We also test two network externalities hypotheses with an econometric analysis, using growth data for CIRRUS and PLUS, the two largest nationally shared electronic banking networks. The empirical models are motivated by the decision framework. We found that technological compatibility resulted in additional growth of the electronic banking industry as well as the individual national shared networks. The results of this study are consistent with our network externalities hypotheses, and shed light on the competitive adoption and diffusion of IT innovations.
Electronic Trading Systems: Strategic Implications of Market Design Choices BIBA 85-103
  Hugues Levecq; Bruce W. Weber
Modern financial markets compete aggressively for trading activity and investor interest. Information technology, once a crucial element in streamlining paper flows and operations, is now a strategic resource used in attracting or retaining market liquidity. Established exchanges introduce technology to enhance their markets. New market venues challenge the status quo and rely on technology to offer diverse services to increasingly sophisticated investors. In this article, we examine the strategic design decisions embedded in these new electronic trading systems. Design decisions are critical, as they determine the market microstructure that influences investing strategies, patterns of trade, liquidity, and volatility. We propose a taxonomy of design alternatives based on 6 major dimensions: market structure, type of orders, order execution priority rules, price discovery rules, time stamping, and transparency. Using examples of existing systems, we discuss the potential impact of the various alternatives on the eventual attractiveness of the market to the investors.

JOCEC 2002 Volume 12 Issue 2

Multiperiod Scenario Development Using Group Support Systems: An Application to the Future of Hong Kong BIBA 105-119
  Robert W. Blanning; Bruce A. Reinig
Managers facing substantial uncertainties often find it helpful to construct scenarios describing alternative futures. Knowledgeable people may have useful information, observations, and impressions relevant to these futures, but in some organizations and societies they may also be reluctant to openly discuss their ideas. Group support systems (GSS) have been shown to be useful in constructing and analyzing scenarios under these conditions. However, much of this work is based on single-period views that describe the end state of a system without examination of intermediate states leading up to the end state. We show how GSS can be used to construct 2-period scenarios that include 1 intermediate state. In addition, one can use this information to estimate long run effects by calculating the equilibrium probabilities of a stationary Markov chain. We then apply this approach to develop 2-period scenarios that describe possible futures for Hong Kong.
The Effect of Delays in Information Exchange in Electronic Markets BIBA 121-131
  J. Christopher Westland
In this research I explored the impact of information delays in a simple model of negotiation through an electronic market system. I found that a market can accurately reflect buyers' and sellers' preferences only if the rate of injection of price information multiplied by the rate of transfer of price information falls between 0 and 2. It is argued that markets adjust themselves to this constraint in practice. The alternatives are to experience chaotic and catastrophic volatility in prices or to go out of operation. Thus, electronic commerce can provide value beyond merely speeding up operations and increasing capacity. It also helps avoid misleading behavior by both buyer and seller and allows markets to operate in a wider range of trading environments.
Filter and Broker: An Integrated Architecture for Information Mediation of Dynamic Sources BIBA 133-160
  Brigitte Grote; Thomas Rose; Gerhard Peter
When making decisions, access to information and proactive provision of information have become a business imperative. It can be expected that a tremendous amount of information needs can be satisfied much better today by what is offered in information networks, be it the Internet or a corporate intranet for knowledge management purposes. Yet there is also a fair chance that someone issuing a search request (e.g., on the Web) will get drowned in a flood of useless information and thus may miss the only useful tidbit that comes along with it. Likewise, producers of information may not be able to identify suitable customers. Various approaches have been suggested to cope with these problems, for instance, databases containing meta-information or data-warehouse systems. The most promising approach is the use of electronic marketplaces, where consumers and producers of information virtually meet for interaction. A special blend of information traders strives to satisfy the needs of both. In this article we propose an architecture that implements a new consumer-producer interaction and discuss the major components in detail: (a) brokers, who play the role of intermediaries between producers and consumers, and (b) filters, which try to reduce the load of information on either of the participants.
Who Will Be the Adopters of 3G Mobile Computing Devices? A Probit Estimation of Mobile Telecom Diffusion BIBA 161-174
  Jonathan Wareham; Armando Levy
We characterize the role of the diffusion of information in the demand (adoption) of mobile telephones in the United States. Different strategies for identification of the parameters of the diffusion process are discussed. Using survey data from 1994 and 1998 and a probit model of mobile phone adoption, we estimate the rate of diffusion and bounds for the long-run market shares for specific socioeconomic market segments. Implications for the diffusion of 3G mobile computing devices are explored.
Data Models for Information Sharing in E-Partnerships: Analysis, Improvements, and Relevance BIBA 175-195
  Boris Jukic; Nenad Jukic; Manoj Parameswaran
In this article we address the issue of sharing information in organizational forms involving parties with various levels of mutual trust and need for cooperation. We evaluate existing data access models and emphasize their failure to deliver a feasible method for providing consistent views of corporate information shared with other partners in an ad hoc relationship. A new data access model is proposed as a solution to this problem. This model combines the ease of maintenance with the ability to present semantically consistent views of the world to all constituents of a virtual enterprise. We discuss the relevance of information sharing across multiple-access levels for achieving competitive advantage in the electronic marketplace.

JOCEC 2002 Volume 12 Issue 3

Adoption of Telemedicine Technology by Health Care Organizations: An Exploratory Study BIBA 197-221
  Paul Jen-Hwa Hu; Patrick Y. K. Chau; Olivia R. Liu Sheng
Recent advances in information and biomedicine technology have significantly increased the technical feasibility, clinical viability, and economic affordability of telemedicine-enabled service collaboration and delivery. Health care organizations around the world have become increasingly interested in acquiring and implementing telemedicine technology to improve or extend existing patient care and services. The ultimate success of telemedicine in an adopting organization requires adequate attention to both technological and managerial issues. This study examined organizational technology adoption, an essential management issue facing many health care organizations interested in or currently evaluating telemedicine. On the basis of a framework proposed by Tornatzky and Fleischer [1], we developed a research model for targeted technology adoption and empirically evaluated it in a survey study that involved most of the public health care organizations in Hong Kong. Results from our exploratory study suggest that the model exhibits reasonable significance and explanatory utility to differentiate between adopting and nonadopting organizations. Specifically, the collective attitude of medical staff and perceived service risks were found to be significant determinants of targeted technology adoption. Several research and management implications that emerged from our study findings are also discussed.
Preference Ordering Cash, Near Cash, and Electronic Cash BIBA 223-242
  J. Christopher Westland
In this research, I surveyed merchant and customer preferences for cash, near cash, and electronic cash (e-cash). E-cash promises new but untested advantages in security, portability, and privacy. In this research, I conducted a large survey of e-cash acceptance by customers and retail merchants to provide 3 preference orderings for cash, near cash, and e-cash. Nonparametric hypothesis testing showed that e-cash was preferred to other payment methods, but the statistics were equivocal. Stochastic dominance statistics explained the equivocal results returned from nonparametric tests. E-cash dominated the hybrid card but was clearly dominated by traditional cash. E-cash neither dominated nor was dominated by credit cards and debit cards. After adjusting for technology adoption risk, a clear preference ordering was obtained: (a) cash and credit cards were preferred to e-cash, and (b) e-cash was preferred to debit cards and hybrids. I conclude that e-cash is unlikely to compete well against cash and credit cards for 3 reasons: (a) switching costs, (b) technology risk, and (c) insufficient market differentiation. The results suggest that there may not be a market niche for e-cash. Instead, successful products are likely to emerge in the form of vertical market cash substitutes that meet specific objectives. As commerce evolves toward customization to a focused cross-section of consumers, a "one-size-fits-all" e-cash is not likely to remain a viable product.
Diffusion Models for B2B, B2C, and P2P Exchanges and E-Speak BIBA 243-261
  M. Tolga Akcura; Kemal Altinkemer
Consulting groups are predicting that the future of business-to-business (B2B) and business-to-consumer (B2C) exchanges will generate exponentially increasing revenues. However, the economic uncertainties in the market and technological innovations, such as peer-to-peer (P2P) networks and e-Speak from Hewlett Packard, may significantly alter the outlook for the current exchanges. In this study, we adopted a diffusion model for B2B, B2C, and P2P exchanges and e-Speak to capture the future revenue potentials of these electronic exchanges. We simulated the proposed model to incorporate possible market uncertainties. We initially analyzed the case where B2B and B2C increased exponentially. Then, we considered the case of migration from B2B and B2C to P2P and e-Speak. We tested the rate of diffusion with respect to certain parameters, such as imitation, innovation, market potential, and switching rate. With the set of parameters we used, we found out that the effect of imitation was stronger than innovation. The switching rate played an important role in how easy it was for agents to move to later technologies. The inertia factor determined the winner in the marketplace, based on the values, making it more expensive or less expensive to switch to later technologies.