Engineering information technology value in IT-based industries using partial adjustment valuation and resource-based view approach
Abdurrahman L.a, Suhardia, Langi A.Z.R.a
a School of Electrical Engineering and Informatics, Bandung Institute of Technology, Bandung, Indonesia
Abstract
Copyright © 2016 Inderscience Enterprises Ltd.This paper provides a study concerning IT value substance in IT-based industries. The applied method is a partial adjustment valuation approach, expressing that the real output is part of the preferred output. Thus, there should be a coefficient between both, which shakes the relationship in between, called a speed of adjustment. To examine the method, this theory experimented six Indonesian IT-based firms through two cases: three-factor (K, L, and I) and two-factor (K and L) models. Here K = regular capital, L = labour expense, and I = IT spending. The results disclose dissimilarities between the two cases, the three-factor model retains performance ratios superior to the two-factor model. This deviation leads to a comprehension that the value of IT is tangible in improving business performances. Consequently, the performance variables will be material to evaluate the role of IT in the firm. Thus, open for the IT value engineering study to develop further.
Author keywords
Business performance,Organisation,Partial adjustment,Performance ratio,Production function,Resource-based view
Indexed keywords
Business performance,Engineering,IT value engineering,IT-based industry,Organisation,Partial adjustment,Performance ratio,Production function,RBV,Resource-based view,SoA,Speed of adjustment