Sunil Mithas
Associate Professor,
Decision, Operations and Information Technologies Department,
Robert H. Smith School of Business at the University of Maryland
March 16, 2012
Speakman Hall 200, 1000am – 1130am
Seminar Title : Information Technology and Globalization: Theory and Evidence
Abstract
Does information technology (IT) enable firms to globalize their operations and achieve higher foreign revenues and foreign profits? Although several studies have argued that IT can help firms globalize their operations, few studies have empirically tested this conjecture. We identify and discuss three mechanisms that explain why IT investments enable firms to globalize their operations – value chain coordination, value chain configuration, and local responsiveness. Using data on 259 multinational firms for an 8-year period (1999 – 2006), we find that aggregate IT investments are positively associated with higher levels of foreign revenues and lower levels of total costs. In turn, the increase in foreign revenues and reduction in total costs mediate profits from foreign operations. IT investments also help to increase domestic revenues and domestic profits. On the whole, we find that IT contributes to globalization both through higher revenues and lower total costs.
Please email swattal@temple.edu for a copy of the paper.