Paul Chwelos

Research Report: Empirical Test of an EDI Adoption Model

This paper is the first test of a parsimonious model that posits three factors as determinants of the adoption of electronic data interchange (EDI):readiness, perceived benefits, andexternal pressure. To construct the model, we identified and organized the factors that were found to be influential in prior EDI research. By testing all these factors together in one model, we are able to investigate their relative contributions to EDI adoption decisions. Senior purchasing managers, chosen for their experience with EDI and proximity to the EDI adoption decision, were surveyed and their responses analyzed using structural equation modeling. All three determinants were found to be significant predictors of intent to adopt EDI, with external pressure and readiness being considerably more important than perceived benefits. We show that the constructs in this model can be categorized into three levels:technological, organizational, andinterorganizational. We hypothesize that these categories of influence will also be determinants of the adoption of other emerging forms of interorganizational systems (IOS). 1

Information Technology and Intangible Output: The Impact of IT Investment on Innovation Productivity

Prior research concerning IT business value has established a link between firm-level IT investment and tangible returns such as output productivity. Research also suggests that IT is vital to intermediate processes such as those that produce intangible output. Among these, the use of IT in innovation and knowledge creation processes is perhaps the most critical to a firms long-term success. However, little is known about the relationship between IT, knowledge creation, and innovation output. In this study, we contribute to the literature by comprehensively examining the contribution of IT to innovation production across multiple contexts using a quality-based measure of innovation output. Analyzing annual information from 1987 to 1997 for a panel of large U.S. manufacturing firms, we find that a 10% increase in IT input is associated with a 1.7% increase in innovation output for a given level of innovation-related spending. This relationship between IT, research and development (R&D), and innovation production is robust across multiple econometric methodologies and is found to be particularly strong in the mid to late 1990s, a period of rapid technological innovation. Our results also demonstrate the importance of IT in creating value at an intermediate stage of production, in this case, through improved innovation productivity. However, R&D and its related intangible factors (skill, knowledge, etc.) appear to play a more crucial role in the creation of breakthrough innovations.

Research Note---Does Technological Progress Alter the Nature of Information Technology as a Production Input? New Evidence and New Results

Prior research at the firm level finds information technology (IT) to be a net substitute for both labor and non-IT capital inputs. However, it is unclear whether these results hold, given recent IT innovations and continued price declines. In this study we extend prior research to examine whether these input relationships have evolved over time. First, we introduce new price indexes to account for varying technological progress across different types of IT hardware. Second, we use the rental price methodology to measure capital in terms of the flow of services provided. Finally, we use hedonic methods to extend our IT measures to 1998, enabling analysis spanning the emergence of the Internet. Analyzing approximately 9,800 observations from over 800 Fortune 1,000 firms for the years 1987--1998, we find firm demand for IT to be elastic for decentralized IT and inelastic for centralized IT. Moreover, Allen Elasticity of Substitution estimates confirm that through labor substitution, the increasing factor share of IT comes at the expense of labor. Last, we identify a complementary relationship between IT and ordinary capital, suggesting an evolution in this relationship as firms have shifted to more decentralized organizational forms. We discuss these results in terms of prior research, suggest areas of future research, and discuss managerial implications. *This paper is dedicated to the memory of Paul Chwelos, respected colleague and dear friend.

Faster, Smaller, Cheaper: An Hedonic Price Analysis of Pdas

We compute quality-adjusted price indexes for personal digital assistants (PDAs) for the period 1999 to 2004. Hedonic regressions indicate that prices are related to processor generation and clock speed, memory capacity, screen size and quality and the presence of a digital camera or wireless capability. A particularly salient feature of PDAs is portability, where we find: (i) purchasers value the energy density of the battery technology (e.g. lithium ion) rather than the battery life in hours; and (ii) the physical characteristics of the PDA (e.g. weight, volume) are nonlinearly related to price, suggesting that valuation of the physical form of PDAs does not bear a simple linear relationship to characteristics, either in absolute terms (‘smaller is better’) or vs. an ergonomic ‘sweet spot’. Rather, portability characteristics are correlated with other desirable attributes, making the relationship between price and portability difficult to disentangle. However, hedonic price indexes are robust across different measures of the portability of PDAs. Hedonic indexes using the dummy variable, characteristics prices, and imputation approaches decline on average between 19 and 26% per year. A matched model price index computed from a subset of observations declines at 19% per year, while a fixed-effects hedonic index declines at 14% per year.

Approaches to performance measurement in hedonic analysis: Price indexes for laptop computers in the 1990's

This paper estimates price indexes for laptop personal computers using hedonic methods and data taken from PC Magazine technical reviews. We use benchmark test results to construct a measure of system performance that encapsulates factors that have previously gone unmeasured, such as the interactions between hardware components. The resulting hedonic function is parsimonious yet has good explanatory power. A second approach to performance measurement is developed using a set of technical proxies that are shown to closely approximate the benchmark test scores, and are thus nearly perfectly equivalent in terms of resulting price index estimates. While not as parsimonious as a single performance measure, these proxies have the advantage of not requiring direct performance testing, and could thus be applied to larger data sets. Laptops were found to have declined in quality-adjusted price at an average rate of 40% per year for the period 1990-1998.

Intellectual Property Rights and the Transition to the Knowledge-Based Economy

Intellectual property is perhaps the most important — and often the only —significant asset of knowledge-based enterprises. The legal structure of Intellectual Property Rights (IPRs) defines not just ownership of these intangible assets, but also their value, and the nature of the markets in which they can be bought and sold. The statutory framework of IPRs, associated jurisprudence, and the institutions which administer them therefore constitute a critical part of the infrastructure of the new knowledge-intensive sectors of the economy. In the transition to a knowledge-based economy, firms’ strategies for creating, managing, and realizing returns from intellectual property will be a key factor in creating wealth and employment. This paper examines the extent to which new technologies and new ways of doing business present challenges for Canada’s current IPR regime, and discusses possible policy responses.