Wednesday, July 14, 2004

Using IT for Learning: The Unpopular Road to Profitability

Recently I met with Stephanie Watts, assistant professor in Boston University's Information Systems Department. Stephanie and her colleagues at BU have been doing intriguing work studying the relationship of business and technology.

In collaboration with Dowan Kwon of Concordia University, Watts has investigated the different ways that firms evaluate their use of IT, and how those differences relate to firm performance.

The most common mode of evaluating IT is based on efficiency. The firm views IT as a means of increasing process efficiency and automation, focusing on exploiting existing competencies.

Less often, firms evaluate IT based on learning. Here the firm views IT as a means to enhance knowledge transfer or support repositories of organizational experience.

By studying over 100 firms in the US and Canada, Watts and Kwon observed that managers of IT typcally focus more on efficiency and less on learning. Furthermore, as a marketplace becomes increasingly competitive or fast-changing, firms in that market will focus their IT ever more exclusively on efficiency and not learning. However, those managers who do evaluate IT in terms of learning generally achieve higher returns, based on overall firm performance.

Click here for the full paper in pdf.

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