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Cited by 341Outsourcing and Supply Chain ManagementInformation Technology Governance and StrategyMerger and Competition Analysis

Information Technology and Firm Boundaries: Evidence from Panel Data

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Hitt, Lorin M.·1999·Information Systems Research
DOI 10.1287/isre.10.2.134
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Abstract

Previous literature has suggested that information technology (IT) can affect firm boundaries by changing the costs of coordinating economic activity within and between firms (internal and external coordination). This paper examines the empirical relationship between IT and firm structure and evaluates whether this structure is consistent with prior arguments about IT and coordination. We formulate an empirical model to relate the use of information technology capital to vertical integration and diversification. This model is tested using an 8-year panel data set of information technology capital stock, firm structure, and relevant control variables for 549 large firms. Overall, increased use of IT is found to be associated with substantial decreases in vertical integration and weak increases in diversification. In addition, firms that are less vertically integrated and more diversified have a higher demand for IT capital. While we cannot rule out all alternative explanations for these results, they are consistent with previous theoretical arguments that both internal and external coordination costs are reduced by IT.

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  • The greater the scope of business, the more likelihood enterprises invest to digitalize operations and to reduce internal co-ordination costs, administrative complexities, and information processing.

    “Scholars describe SBO as an adoption predicator; the greater the scope of business, the more likelihood enterprises invest to digitalize operations and to reduce internal co-ordination costs, administrative complexities, and information processing (Bakos, 1998;Chopra & Meindl, 2001;Hitt, 1999;Zhu et al., 2003).”

    From Using T-O-E theoretical framework to study the adoption of ERP solution (2016) · cites this paper as Hitt, 1999

  • The role of SBO as an adoption predicator has been variously confirmed.

    “The role of SBO as an adoption predicator has been variously confirmed (Hitt, 1999;Thong, 1999;Tornatzky & Fleischer, 1990;Zhu et al., 2003).”

    From Using T-O-E theoretical framework to study the adoption of ERP solution (2016) · cites this paper as Hitt, 1999

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Authors
Hitt, L. M.
Affiliations
University of Pennsylvania (US)
Corresponding author
Hitt, Lorin M.
ORCID
Hitt, Lorin M.
Venue
Information Systems Research
Publisher
Institute for Operations Research and the Management Sciences (INFORMS)
Published
1999-06
Volume
10
Issue
2
Pages
134-149
ISSN
  • 1047-7047 (ISSN-L)
  • 1526-5536
DOI
10.1287/isre.10.2.134
OpenAlex
W1973836970
Cited by
341
References
30
Citations by year
2026: 4 · 2025: 4 · 2024: 7 · 2023: 7 · 2022: 12 · 2021: 9 · 2020: 11 · 2019: 12 · 2018: 4 · 2017: 10 · 2016: 15 · 2015: 10 · 2014: 9 · 2013: 16 · 2012: 16
FWCI
19.25
Type
journal article
Language
en
Open access
Locations
  • Information Systems Research (publishedVersion)
  • ScholarlyCommons (University of Pennsylvania) (submittedVersion)
Topics
  • Social Sciences › Business, Management and Accounting › Management Information Systems › Outsourcing and Supply Chain Management
  • Social Sciences › Business, Management and Accounting › Management Information Systems › Information Technology Governance and Strategy
  • Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Merger and Competition Analysis
Keywords
firm boundaries, vertical integration, diversification, corporate structure, large corporations

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