Week 09 – Government and Public Policies
Paper: Information Technology and Administrative Efficiency in U.S. State Governments – A Stochastic Frontier Approach
While extant literatures discussing IT value in organizations focus mostly on for-profit institution, this paper provide a new perspective to understand how IT system and investment could improve the efficiency of government and public administration. Analyzing a combination dataset from the IT budget data in state governments, the census data on state government expenditures, and a variety of information on public services states provide, the authors measure technical efficiency with a stochastic frontier analysis with a translog cost function and estimate the effect of IT spending on efficiency. The analyses provide evidence for a significantly positive relationship between IT spending and cost efficiency and indicate that on average, all else being equal, a $1 increase in per capita IT budget is associated with $1.13 efficiency gains.
Since state governments have used IT extensively for internal administration and delivery of public services such as education, social welfare, healthcare, and law enforcement, it is critical from both taxpayer perspective and IT investment planning perspective to understand whether the adoption and investment of IT infrastructure indeed generates sufficient value to the public. The authors adopt a stochastic frontier approach with a cost function, whose data are collected from NASCIO and the census data on state government finances, to estimate the relationship between IT spending and cost efficiency of state governments. The authors find that the relationship is positive and statistically significant, suggesting that the higher IT investments, the greater state government efficiency is.
Pang, M.-S., Tafti, A., & Krishnan, M. S. (2014). Information Technology and Administrative Efficiency in U.S. State Governments: a Stochastic Frontier Approach1. MIS Quarterly, 38(4), 1079-A16.
In recent decades, IT has become an indispensable tool for major strategic initiatives in state governments, but whether these efforts improve the administrative efficiency remain is unknown. In order to get a better understanding of IT’s impact on the public sector, this study estimates the relationship between IT spending and cost efficiency in U.S. state government.
IT investments in government organizations can lead to cost efficiency improvements in two ways: reducing human labor and enhancing the productivity of the administrative process; automating digitized business and increasing transparency and accountability in administration. Furthermore, the study proposes three moderating factors from economic, demographic and political environments respectively, specifically, given in the states with more private-sector IT industries or a larger share of rural population or more divided government, the positive of IT would be stronger. Then authors leverage several public data sources and use a two-stage estimation approach to analyze data. Because there is not a collective output measure for state government, and production of public service is exogenous, the study uses cost function and to posit state governments attempt to limit the use of inputs accordingly. In the first stage, they measure the cost efficiency of state governments in a stochastic frontier analysis with a translog cost function; in the second state, they regress the estimated efficiency on IT measures and other exogenous factors that are used in previous literature. The estimated results support all of their hypothesis.
The study offers meaningful policy implication, specifically, the results justify states governments’ investment in IT. It also contributes to the IS by integrating research from IS, political sciences, and public economics, expanding the boundary of IT value research to the public sector.
Pang, M.-S., Tafti, A., & Krishnan, M. S. (2016). Do CIO IT Budgets Explain Bigger or Smaller Governments? Theory and Evidence from U.S. State Governments. Management Science, 62(4), 1020–1041.
There is a fundamental economic debate among the public, the media, and academia as to what is the proper boundary and role of a government in the contemporary economy. Technological development as one of the key factors behind government growth, should be paid more attention. This study is interested in how information technology (IT) investments made by governments affect the size of government spending. More specifically, this paper examines the relationship between IT budgets of a state chief information officer (CIO) and state government size.
Two opposing hypotheses are proposed. One is that IT investments make state administration more efficient, productive, and transparent, leading to a reduction in state expenditures. The other one is that state governments can utilize digital technologies in initiating a new range of public services that would not have been offered without IT and having a greater control over functions that external organizations would otherwise handle, thus increasing government spending.
Using a variety of data on IT spending and state government expenditures, this study finds that greater IT investments made by a state chief information officer (CIO) are associated with lower state government spending. It is estimated that on average, a $1 increase in state CIO budgets is associated with a reduction of as much as $3.49 in state overall expenditures. Dynamic panel-data model is applied the empirical analysis. A series of robustness checks are implemented to provide further evidences and support the hypothesis.
This work contributes to the IS literature by expanding the boundary of IS research on IT and organizational size to the public sector organizations, to which the IS research has not paid as much attention as it has to the business setting.
Pang, M.-S. (2017). Politics and information technology investments in the U.S. federal government in 2003-2016. Information Systems Research, 28(1), 33-45.
Government information technologies (IT) are often plagued by obsolete legacy systems that are expensive to maintain. These systems are often left in place due to a variety of factors including risk adverse employees, lack of IT commitment/consensus across governing parties, and the sheer volume of difficulties associated with replacing or upgrading IT systems so large in scope that are continually in use. Furthermore, there is a wide variation in IT systems and spending across various agencies and bureaus. To further understanding of factors that influence IT spend, Pang (2017) draws from a range of political science, public administration, and information system literature to develop a theoretical understanding to a previously overlooked phenomenon.
Pang hypothesizes that a federal agency’s capacity-building IT investments are associated with (i) legislative approval for the chief executive, (ii) government dividedness, and (iii) ideological characteristics of the agency. A generalized estimating equation analysis, an approach widely employed for estimating panels with a fractional dependent variable, was conducted on panel dataset of 135 federal agencies and bureaus between 2003 and 2016. Results indicated that the there is a significant, positive relationship between the senate’s confirmation of the chief executive and the agency’s IT investments. Also, there is significant support for the notion that federal agencies are less likely to invest in new IT development under a divided government. Finally, there is significant support for the fact that ideologically moderate federal agencies invest more in development, modernization, and enhancement IT spending. These findings indicate that national politics significantly impact IT investments; investment is dependent on securing compelling policy mandates and political legitimacy from Congress. Therefore, it is proposed that Congress pay more attention to and provide more support for IT investments to ensure the IT infrastructure supports the federal government’s goal to be more agile, flexible, and efficient.
Pang, M.-S. and Pavlou, P.A. (2017) “Armed with Technology – Preventing Fatal Shootings by the Police,” A Working Paper.
The trust between the police and the public in many U.S. cities is more acrimonious than ever before since the Chicago shooting of Laquan McDonald. While technology, especial IT, has enhanced human’s decision-making process in many fields, we do not have sufficient knowledge of the effectiveness of these technologies, particularly in terms of their role in affecting the use of lethal force on civilians by the police. This study theorizes how technology use for intelligence analyses and access influences a police officer’s decision to use lethal force.
With a panel data merged of fatal shootings from The Washington Post and killedbypolice.net in 2013-2016, the empirical analyses show that both the use of smartphones and the statistical analyses of crime data by U.S. local police departments are associated with a significant decrease in fatal shootings by the police. The authors then explore the moderating effects and find that the positive effect of technology use is more pronounced for armed suspects and among males, the youth, and minorities.
Specifically, the authors use signal detection theory to construct a decision optimization under uncertain, which can be moderated by the use of technology. To address the unobserved heterogeneity caused by the spatial contagion of crimes and violence. The authors utilize a spatial panel autoregressive GLS Model, which allow the residual of a random effects model spatially correlated, to validate the main hypothesis that the technology can lead to a decrease in fatal shootings by the police. To test the moderating effects in hypothesis 2, the authors conduct subsample analysis with a SUR random effects model.
This study contributes to the Information Systems (IS) literature by 1) demonstrating the significant role of technology use in highly uncertain and violent environments, 2) uncovering the nuanced effects of technology use that vary by gender, age, and ethnicity, and 3) enhancing our understanding of how IT creates value for an organization in uncertain and life-threatening environments.
|Pang et al. (2014, MISQ)||Leting, Jack|
|Pang et al. (2016, Mgt Sci)||Xi|
|Pang (2017, ISR)||Heather|
|Pang and Pavlou (2017)||Joe|
|Cheng, Pang, and Pavlou (2018)||Sid|