Is Market-Based Value Really A Good Proxy of IS Business Value? An Analysis from the Perspective of Asymmetry and Positional Valuing

Market-based approaches to examining IS business value often claim to be better than case studies, fieldwork, surveys, anecdotal evidence to reflect the true value of IS investments. They criticize the likely biases and manipulations to which these approaches are exposed and which lead to equivocal conclusions. Consequently, they argue that they are more legitimate in investigating the business value of information systems since capital markets are efficient and investors are rational. Indeed, they rely on investors' perceptions and interpretations about organizations' IS investments. However, considering the literatures on asymmetry (in strategy and finance) and positional valuing (in philosophy), investors in capital markets do not appear to occupying the right position in relation to IS investments realized by organizations and are exposed to unfavorable information asymmetry compared to the organizations' insiders. As a result, they are unlikely to value IS investments properly, and market-based approaches cannot measure or reflect the true value of IS investments as claimed by their proponents. More broadly, the paper questions the legitimacy of the market-based approaches in comparison with the other research fashions they criticize, the latter at least having the merit of relying on insiders who are well positioned in relation to the IS implemented by organizations and who have the capacity to really value them. In so doing, the paper complements and at the same time challenges the IS literature that draws on market-based approaches to examine the business value of information systems.