Management

Building Initial Online Trust: A Social Learning Theory Perspective and Application on Brick-and-Click Companies

Xu Yunjie et al. — Mon, 11 Oct 2010 09:12:33 PDT

A customer’s trust in an online seller is considered to be an important factor for ecommerce success. The extant research has addressed the question of what online trust is and why some factors such as reputation are helpful to trust building. However, the question of where customers collect information about an online firm to base their trust on has not been addressed. In this study, we investigate different processes through which evidences are collected and trust is built. A framework of four “learning-processes ” is proposed based on social learning theory. To demonstrate the utility of the framework, we apply it to the initial online trust building for brick-and-click firms. As a result, four customer experiences are identified to affect the initial perception of the trustworthiness of a firm’s online operation, i.e., the experience with the website, the experience with the offline establishment, reputation, and general experience with the Internet. Our results suggest that the social learning theory is a viable tool to understand customer’s trust building process. In the context of brick-and-click firms, it helps uncover the significant as well as in significant learning processes. Satisfaction with offline purchase experience is found to be insignificant. This might be due to the lack of integration between online and offline operations. Implications of the study’s findings are discussed.

Option-Based Management of Technology Investment Risk

Michel Benaroch — Mon, 11 Oct 2010 09:12:33 PDT

Real operating (flexibility) options embedded in a technology investment are valuable because they allow management to take rational, value-adding actions that could favorably affect operational traits of the investment (timing, scale, scope, etc.). These options, however, are not inherent in technology investments. Rather, they usually must be carefully planned and designed to fit each investment differently. Building on concepts from the area of financial risk management, this paper presents a methodology for planning the creation of specific operating options designed to maximize the value of a technology investment in light of the risks underlying that investment. The paper also illustrates the use of the methodology in the context of a Web-based information technology investment.

Role of Commitment and Motivation in Knowledge Management Systems Implementation: Theory, Conceptualization, and Measurement of Antecedents of Success

Yogesh Malhotra et al. — Mon, 11 Oct 2010 09:12:32 PDT

Our ignorance exceeds our knowledge where issues of motivation and commitment of knowledge workers are concerned in the context of knowledge management systems (KMS) implementation [1,16,17,18]. This study is motivated by the pervasive confusion about the role of knowledge workers ' motivation and commitment in KMS implementation and sparse, if any, theoretical or empirical research on these issues. This paper proposes a theoretical framework for understanding how knowledge workers' commitment and motivation affect the use of KMS and resulting organizational performance of the KMS. The theoretical and empirical validation of the framework require first and foremost the theoretical development of the knowledge workers ' commitment and motivation constructs and empirical validation of these constructs in the context of a real world organizational study of KMS implementation. The authors attempt to fulfill these specific goals within the scope of this paper. Future empirical research on the integration of motivation and commitment within diverse implementation contexts of KMS and organizational knowledge management programs is expected to further advance the theoretical and empirical development of the proposed framework.

Labor scheduling with employee turnover and absenteeism

Fred F. Easton et al. — Mon, 11 Oct 2010 09:12:32 PDT

Most labor staffing and scheduling models presume that all employees scheduled for duty reliably report for work at the beginning of their shift. For industries with even moderate turnover or absenteeism, this assumption may be quite costly. We present a profit-oriented labor scheduling model that accounts for the day-to-day flux of employees and capacity induced by voluntary resignations, new hires, experience curves, and absenteeism. The proposed model also anticipates revenue losses due to reneging by customers whose patience decays exponentially with queue time. Our computational studies suggest that firms with comparatively high transaction volumes, long transaction times, and/or relatively tight profit margins may experience significant benefit from this approach. Compared with conventional labor scheduling models, the proposed method boosts average expected profits by more than 10 percent in certain operating environments.

Controlling the Complexity of Investment Decisions Using Qualitative Reasoning Techniques

Michel Benaroch et al. — Mon, 11 Oct 2010 09:12:32 PDT

Assembling financial instruments such as equities, bonds, options, and other derivatives into a portfolio requires a thorough understanding of how the portfolio will behave in response to changes of specific economic variables and parameters of the instruments. With more information about a more diverse set of instruments becoming available to traders, it is becoming important to limit the complexity of the analysis involved. We show how this complexity can be limited by using qualitative analysis, where the objective is to construct a few good vehicles which can then be analyzed quantitatively. We illustrate how two qualitative reasoning techniques -- qualitative simulation and qualitative synthesis -- are used to design investment vehicles for risk management purposes. These techniques are currently employed by a prototype expert that aims at assisting traders solving a risk management problem called hedging.

Managing Information Technology Investment Risk: A Real Options Perspective

Michel Benaroch — Mon, 11 Oct 2010 09:12:31 PDT

Past information systems research on real options has focused mainly on evaluating information technology (IT) investments that embed a single, a-priori known option. However, since real options are not inherent in any IT investment, they usually must be planned and intentionally embedded in a target IT investment in order to control various investment-specific risks, just like financial risk management uses carefully chosen options to actively manage investment risks. Moreover, when an IT investment involves multiple risks, there could be numerous ways to reconfigure the investment using different series of cascading (compound) options. In this light, we present an approach for managing IT investment risk that helps to rationally choose which options to deliberately embed in an investment so as to optimally control the balance between risk and reward. We also illustrate how the approach is applied to an IT investment entailing the establishment of an Internet sales channel.

Information Ecology and Knowledge Management: Toward Knowledge Ecology for Hypertubulent Organizational Environments

Yogesh Malhotra — Mon, 11 Oct 2010 09:12:31 PDT

The traditional view of organizational systems and supporting information and knowledge systems is based on the model of a well-oiled machine expected to deliver optimum performance derived from pre-defined parameters and specifications. Such systems consider performance as a derivative of external controls defined by the designers of the systems and have given marginal importance to the self-adaptive and emergent nature of human and organizational systems. These characteristics of human and organizational systems are particularly relevant to their adaptation and survival within dynamically changing business environments. Recently, some management thinkers have attempted to address the human bases of information systems within the framework of information ecology. This characterization, although interesting, needs to be further developed to account for the human sense making processes and self-regulatory nature of the natural ecosystems relevant to new organizational environments. We extend the information ecology framework to a framework of knowledge ecology. The knowledge ecology of organizational systems goes beyond the emphasis on information, to account for action, performance and adaptation of self-regulatory systems.

Justifying Electronic Banking Network Expansion Using Real Options Analysis

Michael Benaroch et al. — Mon, 11 Oct 2010 09:12:30 PDT

The application of real options analysis to information technology investment evaluation problems recently has been proposed in the IS literature by Dos Santos (1991), Kambil et al. (1993), Kumar (1996), Chalasani et al. (1997), and Taudes (1998). The research reported on in this paper illustrates the value of applying real options analysis in the context of a case study involving the deployment of point-of-sale (POS) debit services by the Yankee 24 shared electronic banking network of New England. In the course of so doing, the paper also attempts to operationalize real options analysis concepts by examining claimed strengths of this analysis approach and balancing them against methodological difficulties that this approach is believed to involve. The research employs a version of the Black-Scholes option-pricing model that is adjusted for risk-averse investors, showing how it is possible to obtain reliable values for Yankee 24's "investment timing option", even in the absence of a market to price it. To gather evidence for the existence of the timing option, basic scenario assumptions and the parameters of the adjusted Black-Scholes model, a structured interview format was developed. The results obtained using real options analysis enabled the network's senior management to identify conditions for which entry into the POS debit market would be profitable. These results also indicated that, in the absence of formal evaluation of the timing option, traditional approaches for evaluating information technology investments would have produced the wrong recommendations.