New Technologies and the Value of Information Systems
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As new forms of information systems emerge, they affect organizations in new ways. Technologies such as cloud computing, virtualization and mobile computing are revolutionizing the way businesses work. So many aspects of the value that is created by these new technologies are not explicitly observable, and capturing them calls for approaches beyond measuring firms' financial outcomes. In this dissertation, I conduct three studies to examine how technologies create tangible and intangible value. In the first study, we study the intangible value created through availability of information in the context of online peer-to-peer lending. Technological advancements in web-based information systems have given rise to Web 2.0 market mechanisms in which consumers act as buyers, sellers and experts. Participants act based on their perception of trustworthiness of other parties and the risks involved in the associated transactions. We use data from a peer-to-peer lending community to empirically investigate the role of information systems in alleviating adverse selection. We posit that due to the repeated nature of transactions, borrowers develop a reputation which is the collective perception of the lenders about the borrower. We propose a simultaneous-equation model of outcomes and a dynamic latent class model of reputation, and use the novel approach of latent instrumental variable modeling to deal with endogeneity. We show that accounting for reputation improves the explanatory power of the model, and provide a way to empirically model the evolution and impact of reputation in online platforms where repeated transactions are performed. Retailers are increasingly exploiting online auctions as an effective and low cost distribution channel for disposing large quantities of inventory. To clear large inventories, these sellers conduct many auctions of identical items one after another, termed as sequential online auctions. In such auction environments, bidders have opportunity to participate in many auctions to find good bargains. There has been a host of studies to explore bidder behavior in this environment, but none has ever addressed the underlying reasons of a bidder's decision to stop participating before winning the item. In the second study, we use survival analysis to investigate this phenomenon which we call bidder's attrition. In the third study, we analyze the competition dynamics of cloud computing providers using two different analytical models. We first use a two-period model of duopoly competition of cloud providers with differentiated products. We show that when capacity is perceived as a quality signal and economies of scale are present, the two markets will be separated such that each firm only serves the customers that have a preference for its product. We then develop a differential game model of duopoly competition, derive the long-run stationary equilibrium, and analyze the short-run dynamic decision making of the firms in the transition period. We observe that although initial market shares do not affect the steady-state market sizes, initial capacities, maximum budget, cost of capacity provision and market switching parameters are all important in determining the steady-state market structure and long-run profit streams of the firms.