Starling David Hunter

Information technology, contextual factors and the volatility of firm performance

This study uses previous theory developed in the IT implementation literature and the information processing view of the firm to empirically investigate the impact of IT investments and several contextual variables on the volatility of future earnings. We use InformationWeek 500 data on IT spending from 1992–1997 to find evidence that IT investments increase the volatility of future earnings but that this impact is highly contingent upon three firm level contextual factors — sales growth, unrelated diversification, and size. These factors can lead to conditions in which IT increases or reduces earnings volatility. Taken together, these results may help explain what has recently been termed the “new productivity paradox,” i.e., the apparent under-investment in information technology despite evidence of highly positive returns for doing so, and suggests settings where managers may be under- or over-discounting returns on IT investments.

Contested Codes: The Social Construction of Napster

Abstract In the 5 years since its inception, some interpretations of the software program known as Napster have been inscribed into laws, business plans, and purchasing decisions while others have been pushed to the fringes. This article examines how and why certain assumptions about Napster have gained greater currency while others have not. Our analytical approach involves an examination of discourse about Napster in several arenas—legal, economic, social, and cultural—and is informed by a conceptualization of Napster as an ongoing encounter between, rather than the accomplishment of, inventor(s), institution(s), and interest(s). While we recognize the value of empirical examinations of Napsters impact on firms and markets, as well as the proscriptive advice which it supports, we opt here for providing a contextualized understanding of the technology that complements rather than substitutes for empirical analyses of it.

On the Feasibility of Improving Patent Quality One Technology at a Time: The Case of Business Methods

Following the Federal Circuits 1998 decision in State Street Bank & Trust Co. v. Signature Financial Group, Inc. holding that there was no per se exclusion from patentability for software-implemented business methods, the number of applications for and grants of such patents on increased dramatically. A large number of critics castigated them for two primary reasons: First, some contended that patents should simply not be allowed on such subject matter. Second, a much larger number of critics asserted that these patents were of singularly inferior quality because they had been issued without due consideration to the relevant prior art-documentary evidence of what others had done in the past. In response to these criticisms, the United States Patent and Trademark Office (PTO) instituted an initiative in March 2000 that it called the Second Pair of Eyes Review, intended to make it more difficult to obtain business method patents. Among other features, the SPER program called for a second-level review upon allowance for patent applications in Main Class 705. Each of the authors had independently conducted previous research leading us to conclude that software-implemented business method patents cited prior art that was not inferior in quantity or quality to other types of patents, and that the many prior art-related criticisms were not supported by empirical evidence. Although some business method patents undoubtedly were of low quality, one finds low-quality patents in all fields. Be that as it may, we believe it important to empirically assess the effects of the SPER initiative. The program requires substantial resources, and if it has not had significant positive effects, these wasted resources constitute a tax on innovation because the PTO is supported by user fees. Perhaps a more important reason for evaluating SPERs effects, however, is that the PTO declared it to be a success and announced plans to expand it to other fields. Whether or not the agency expands the program in the near term, it is important to know whether targeting patent reforms at particular technology fields is a model that should ever be replicated. Employing negative binomial regression models, we found that the SPER initiative did indeed have significant positive effects on the quantity and quality of prior art cited in patent applications to which it applied. Using logistic regression, we determined that the SPER initiative also led to a significant increase in the number of Main Class 705 patents that cited at least some prior art. Moreover, we found that, after SPER, examiners themselves added significantly more prior art references that did examiners of closely related patents with Secondary 705 classifications. Success within this narrow operative domain, however, is seriously tempered by a number of factors, leading to the conclusion that attempting to improve patent quality one technology at a time is not a model that should be repeated. Because of definitional problems that are impossible to overcome, and because the patent classification system is very poorly suited for this kind of task, such an approach to patent reform is and always will be grossly underinclusive and subject to gaming by both patent applicants and beleaguered patent examiners. Attempts to improve patent quality should not focus on a single field.

Same technology, different outcome? Reinterpreting Barley's Technology as an Occasion for Structuring

In the last few decades, several studies have found the same technology implemented in highly similar organizational settings to be associated with very different consequences for structure and process. The seminal study in this stream of research is Barleys (1986) Technology as an Occasion for Structuring, which reported that two similarly composed radiology departments implemented the same technology (computerized tomography scanners), yet experienced very different structural outcomes. In this paper I re-analyze the original studys data under three different statistical assumptions. First, I performed an arcsine transformation on the dependent variable where the original study used the raw probabilities. Second, I specified a power regression model in which the original study employed a linear regression. Finally, I user fewer dummy variables in the ‘combined’ regression models to determine the distinct phases through which the two hospitals evolved. Taken together, these assumptions produce very different results from the original study. Specifically they indicate that the radiology departments did not decentralize at different rates and did not do so over a different number of distinct phases. From my analysis come three specific recommendations for research investigating the consequences of information technology in similarly constituted organizations: (1) exchange the default assumption of homogeneity of outcomes with one of heterogeneity; (2) explicitly account for both the observable properties of technology and the context of its use; and (3) state clearly and a priori the standard used to classify structural and organizational outcomes as ‘different’.In the last few decades, several studies have found the same technology implemented in highly similar organizational settings to be associated with very different consequences for structure and process. The seminal study in this stream of research is Barleys (1986) Technology as an Occasion for Structuring, which reported that two similarly composed radiology departments implemented the same technology (computerized tomography scanners), yet experienced very different structural outcomes. In this paper I re-analyze the original studys data under three different statistical assumptions. First, I performed an arcsine transformation on the dependent variable where the original study used the raw probabilities. Second, I specified a power regression model in which the original study employed a linear regression. Finally, I user fewer dummy variables in the ‘combined’ regression models to determine the distinct phases through which the two hospitals evolved. Taken together, these assumptions produce very different results from the original study. Specifically they indicate that the radiology departments did not decentralize at different rates and did not do so over a different number of distinct phases. From my analysis come three specific recommendations for research investigating the consequences of information technology in similarly constituted organizations: (1) exchange the default assumption of homogeneity of outcomes with one of heterogeneity; (2) explicitly account for both the observable properties of technology and the context of its use; and (3) state clearly and a priori the standard used to classify structural and organizational outcomes as ‘different’.

A Semi-Automated Method of Network Text Analysis Applied to 150 Original Screenplays

In this paper I apply a novel method of network text analysis to a sample of 150 original screenplays. That sample is divided evenly between unproduced, original screenplays (n = 75) and those that were nominated for Best Original Screenplay by either the Academy of Motion Picture Arts & Sciences or by major film critics associations (n = 75). As predicted, I find that the text networks derived from unproduced screenplays are significantly less complex, i.e. they contain fewer concepts (nodes) and statements (links). Unexpectedly, I find that those same networks are more cohesive, i.e. they exhibit higher density and coreness.

Structural Holes and Click-Throughs in Online Advertising

This paper examines the impact of social capital on advertising performance in an online social network. Specifically, I show that a widely-employed measure of social capital - network constraint - explains variation in the number of click-throughs received by 5986 banner advertisements appearing on 25 Twitter-related websites. As predicted, banner advertisements receive significantly more clicks when placed on websites that bridge structural holes.

Organizational Design, Learning, and the Market Value of the Firm

We compare market returns associated with firms’ creation of new units focused on e-business. Two aspects of organization design - governance and leadership - are considered with regard to exploitation- and exploration-oriented organization learning. We find that exploitation in governance (high centralization) is associated with a lower mean and variance in returns; that exploitation in leadership (appointment of outsiders) is associated with the same mean yet higher variance; and, among units exhibiting both modes of learning, the variance of returns are not equal.