Knowledge that Transforms

In recent years, with the emergence and growth of illegal file sharing on the Internet, individual piracy of digital goods, i.e., consumers making illegal copies on their own rather than relying on purchasing copies from commercial pirates, has stirred substantial controversy. Threatened by this growth, the information goods industry took legal action by suing the file sharing peer-to-peer networks and the consumers who illegally share copyrighted material on these networks. In this paper we demonstrate that each one of these two actions aimed to fight individual piracy can backfire by providing strategic disadvantage to legal publishers of information goods. In particular, we show that in the presence of commercial piracy (i) a higher population of consumers who are capable of individual piracy can increase a legal publisher's profits; and (ii) a higher detection and prosecution rate for individual piracy can reduce a legal publisher's profits. Both effects can be observed in markets where commercial piracy is suppressed because the legal publisher can be coerced to take a price cut to minimize the loss of market share. The latter effect can also be observed in markets with active commercial piracy presence because the legal publisher can be forced to raise prices and concede market share to piracy. Our results suggest that information goods producers may be better off by considering their copyright protection policies concerning individual piracy from a more strategic point of view.

Applying behavioral economic theories, we hypothesize that consumers have sticky reference prices for individual information goods, but their perceived value for customizable bundle offers can be significantly influenced by the framing of a multipart pricing scheme. The potential impacts of these framing effects are measurable changes in consumer behavior and sales outcomes. We conducted a series of behavioral experiments and a large-scale natural field experiment involving actual purchases of customized information good bundles to confirm and analyze the hypothesized effects. The results demonstrate a consumer's willingness to purchase a customized bundle of information goods, the size of the resulting bundling, and the consumer's perceptions of the transaction are each significantly influenced by the design of the multipart pricing scheme. These results hold even when the final price and size of a customized bundle are the same across differing schemes. We discuss the potential tradeoffs in economic outcomes that result from price framing (e.g., likelihood of sale versus size of purchased bundles) and the implications for information good retailers.

As a result of newer communication technologies and an increase in virtual communication, employees often find themselves multicommunicating, or participating in multiple conversations at the same time. This research seeks to explore multicommunicating from the perspective of the person juggling multiple conversations at the same time—the focal individual. To better understand this phenomenon, we extend previous theorizing by including the concepts of the episode initiator (whether the second conversation was focal or partner initiated), the fit of the set of media used in the episode, one process gain (conversation leveraging), and process losses. Employing a series of pilot studies and a main study, the resulting model was analyzed using structural equation modeling, finding overall support for the model. Findings suggest that experienced intensity is an important factor influencing process losses experienced during multicommunicating, whereas episode initiator influences process losses and the process gain. Further, media fit moderates the relationship between intensity and process losses. The importance of multicommunicating in the workplace is discussed, the theoretical and practical contributions of this research are described, and limitations and suggestions for future research are outlined.

In this paper we examine why firms seek to control and own interorganizational information systems, or IOS. Practitioners have largely cited the issues related to control and ownership of IOS, referred to as IOS governance in this paper, as the key reason behind the failure of many IOS initiatives. We distinguish between two IOS governance modes, transactional and financial, and develop a mediated-moderation model to explain the factors influencing the governance choices. In our model, the key motivators of IOS governance are the criticality and the replaceability of the resources that firms procure, which affect IOS governance through their influence on the degree of operational integration existing between partners. We hypothesize that while resource criticality will increase the needs for financial and transactional governance because of its positive impact on operational integration, resource replaceability will negatively influence governance needs because of its negative impact on operational integration. Furthermore, technological uncertainty associated with the resources is argued to negatively impact the extent of IOS governance exercised by firms by weakening the positive impact of resource criticality and strengthening the negative impact of resource replaceability on operational integration respectively. We empirically test our model using data gathered from a survey of 159 United States manufacturing firms. Results show that resource criticality positively affects the extent of financial and transactional IOS governance by increasing the need for operational integration, whereas resource replaceability negatively affects them by reducing the need for operational integration. Furthermore, technological uncertainty creates disincentives for IOS governance primarily by weakening the positive influence of resource criticality on operational integration, while no statistically significant effect of technological uncertainty on the relationship between resource replaceability and operational integration was discerned.

This paper uses newly collected panel data that allow for significant improvements in the measurement and modeling of information technology (IT) productivity to address some longstanding empirical limitations in the IT business value literature. First, we show that using generalized method of moments–based estimators to account for the endogeneity of IT spending produces coefficient estimates that are only about 10% lower than unadjusted estimates, suggesting that the effects of endogeneity on IT productivity estimates may be relatively small. Second, analysis of the expanded panel suggests that (a) IT returns are substantially lower in midsize firms than in Fortune 500 firms; (b) they materialize more slowly in large firms—in midsize firms, unlike in larger firms, the short-run contribution of IT to output is similar to the long-run output contribution; and (c) the measured marginal product of IT spending is higher from 2000 to 2006 than in any previous period, suggesting that firms, and especially large firms, have been continuing to develop new, valuable IT-enabled business process innovations. Furthermore, we show that the productivity of IT investments is higher in manufacturing sectors and that our productivity results are robust to controls for IT labor quality and outsourcing levels.

Prior IS research on technological change has focused primarily on organizational information systems and technology innovation; however, there is a growing need to understand the dynamics of supply-side forces in the introduction of new technologies. In this paper we investigate how the interdependencies among information technology components, products, and infrastructure affect the release of new technologies. Going beyond the ad hoc heuristic approaches applied in previous studies, we empirically validate the existence of several patterns of supply-side technology relationships in the context of wireless networking. We use vector autoregression (VAR) to model the comovements of new component, product, and infrastructure introductions and provide evidence of strong Granger-causal interdependencies. We also demonstrate that substantial improvements in forecasting can be gained by incorporating these cross-level effects into models of technological change. This paper provides some of the first research that empirically demonstrates these cross-level effects and also provides an exposition of VAR methodology for both analysis and forecasting in IS research.

This paper analyzes how the presence of organic listing as a competing information source affects advertisers' sponsored bidding and the equilibrium outcomes in search advertising. We consider a game-theoretic model in which two firms bid for sponsored advertising slots provided by a monopolistic search engine and then compete for consumers in price in the product market. Firms are asymmetrically differentiated in market preference and are given different exposure in organic listing aligned with their market appeal. We identify two aspects of a firm's sponsored bidding incentive, namely, the promotive and the preventive incentives. The presence of organic listing alters firms' sponsored bidding incentives such that the stronger firm has primarily preventive incentive, whereas the weaker has mainly promotive incentive. We show that the preventive incentive decreases and the promotive incentive increases as the difference in firms' market appeal decreases, and as a result, even the weaker firm may outbid the stronger competitor under such a co-listing setting. We further examine how the presence of organic listing affects the equilibrium outcomes by comparing it with a benchmark case in which there is only a sponsored list. We show that the differentiated exposure in the organic list gives the weaker advertiser chances to win a better sponsored position, which improves the overall information structure the search engine provides. As a result, the equilibrium social welfare, sales diversity, and consumer surplus increase. Although the presence of the free exposure from the organic list may reduce advertisers' sponsored bidding incentive per se, the overall effect benefits the search engine's growth in the long run.

This research proposes that the forming of a business-to-consumer (B2C) customer relationship is part of a multiphased technology adoption process where attraction is the first step in this sequence. A conceptual model, called the electronic commerce (e-commerce) attraction model (eCAM), offers a theoretical foundation for guiding two empirical studies (N = 345 and N = 240, respectively) investigating how initial customer perceptions of a website influence attraction toward this website. The results support the eCAM as a new theoretical lens for understanding electronic commerce-based attraction. Comparisons are made between the proposed eCAM and previously established adoption models (i.e., the Technology Acceptance Model and WebQual) as well as the discriminant validity of the constructs in these models. Results demonstrate that the eCAM provides additional insights for understanding how website design influences e-commerce attraction and adoption. The implications of these results for future research and website design are discussed.

The growth in the application of information technology to student and employee learning underscores the need to understand the impact of technology-mediated learning (TML) methods. Using previous developed TML models, based on social cognitive theory and adaptive structuration meta-theory, the effectiveness of three training methods were examined in this study: technology mediated (using both vicarious and enactive learning), and collaborative and combined (collaborative plus technology mediated). The study also focused on the learning process. The experimental study results showed a significant positive influence of enactive learning enabled TML and collaborative training on specific training outcomes, and the combined training method shows positive results on all training outcomes. The study results also showed that faithful appropriation of the training methods during the learning process has a moderator effect on training outcomes. The study provides important research implications for theory and practice.

In information security outsourcing, it is the norm that the outsourcing firms and the outsourcers (commonly called managed security service providers, MSSPs) need to coordinate their efforts for better security. Nevertheless, efforts are often private and thus both firms and MSSPs can suffer from double moral hazard. Furthermore, the double moral hazard problem in security outsourcing is complicated by the existence of strong externality and the multiclient nature of MSSP services. In this prescriptive research, we first show that the prevailing contract structure in security outsourcing, bilateral refund contract, cannot solve double moral hazard. Adding breach-contingent sunk cost or external payment cannot solve double moral hazard either. Furthermore, positive externality can worsen double moral hazard. We then propose a new contract structure termed multilateral contract and show that it can solve double moral hazard and induce first-best efforts from all contractual parties when an MSSP serves two or more client firms, regardless of the externality. Firm-side externality significantly affects how payments flow under a multilateral contract when a security breach happens. When the number of client firms for an MSSP increases, we show that the contingent payments under multilateral contracts for any security breach scenario can be easily calculated using an additive method, and thus are computationally simple to implement.