September 15, 2017 1:30-3:00 p.m., BN-4000
Social Learning in Information Technology Investment: The Role of Board Interlocks
This study seeks to extend our understanding of information technology (IT) investment and return from a social learning perspective. We address social learning in the context of interlocks between corporate boards, which, theoretically, are a conduit for sharing knowledge and experiences of firms’ IT investments. Using a large dataset of firm-years from 2001 to 2008, we find (1) a positive relationship between a focal firm’s IT investment and that of its interlocked firms, (2) this positive relationship is amplified by the interlocked firms’ IT-related knowledge but only when board-level communication intensity between the focal firm and its interlocked firms is high, and (3) the component of the focal firm’s IT investment that is attributable to board interlock influence is positively related to the firm’s Tobin’s Q but only when board-level communication intensity between the focal firm and its interlocked firms is high. Collectively these findings support our central thesis: social learning can play a significant role through board interlock in influencing a firm’s IT investments and enhancing their payoff, but to safeguard against mimicking two strategies are pivotal: incorporating board members with high IT-related knowledge and having high communication intensity with the board. Implications for research and practice are discussed.
Arun Rai is Regents’ Professor of the University System of Georgia and holds the Robinson and Harkins Chairs at Georgia State University’s Robinson College of Business (RCB). He is the Editor-in-Chief of the MIS Quarterly, a Fellow of the Association for Information Systems, and a Distinguished Fellow of the INFORMS Information Systems Society. His research has examined how organizations can leverage information technologies in their strategies, relationships, and processes, and how digital innovations can address business and societal problems. Co-founder of RCB’s Center for Process Innovation, which leverages industry-university partnerships for research, he has collaborated with corporations and government agencies in the United States, Asia, and Europe. His former Ph.D. students hold leadership positions at major journals, universities, and professional organizations. He serves on the Board of Directors of Apollo Indraprastha Hospital (one of the largest hospitals in India) and Apollo Health and Life Style Limited (an innovative health retail service provider).