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Research Note: Determinants of Country-Level Investment in Information Technology

Author

Listed:
  • Eric Shih

    (Department of Marketing, International Business and Strategy, Brock University, 500 Glenridge Avenue, St. Catharines, Ontario, Canada L2S 3A1)

  • Kenneth L. Kraemer

    (Center for Research on Information Technology and Organizations, University of California, Irvine, 3200 Berkeley Place North, Irvine, California 92697)

  • Jason Dedrick

    (Center for Research on Information Technology and Organizations, University of California, Irvine, 3200 Berkeley Place North, Irvine, California 92697)

Abstract

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.

Suggested Citation

  • Eric Shih & Kenneth L. Kraemer & Jason Dedrick, 2007. "Research Note: Determinants of Country-Level Investment in Information Technology," Management Science, INFORMS, vol. 53(3), pages 521-528, March.
    • Handle: RePEc:inm:ormnsc:v:53:y:2007:i:3:p:521-528
    DOI: 10.1287/mnsc.1060.0670
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    References listed on IDEAS

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    Cited by:

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    2. Guido Schryen, 2010. "Preserving Knowledge on IS Business Value," Business & Information Systems Engineering: The International Journal of WIRTSCHAFTSINFORMATIK, Springer;Gesellschaft für Informatik e.V. (GI), vol. 2(4), pages 233-244, August.
    3. Twine, Edgar E. & Kiiza, Barnabas & Bashaasha, Bernard, 2015. "The Flexible Accelerator Model of Investment: An Application to Ugandan Tea- Processing Firms," African Journal of Agricultural and Resource Economics, African Association of Agricultural Economists, vol. 10(1), pages 1-15, March.
    4. Prasad, Acklesh & Heales, Jon, 2010. "On IT and business value in developing countries: A complementarities-based approach," International Journal of Accounting Information Systems, Elsevier, vol. 11(4), pages 314-335.

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