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This study conceptualizes sources of information technology synergy and the conditions under which IT synergies improve the corporate performance of multibusiness firms.

Building on the RBV of diversification, this study defines IT relatedness as the extent to which a multibusiness firm uses common IT resources and common IT management processes across its business units.

The strategy and economics literatures define the concept of synergy in terms of super-additive value or sub-additive cost. Two business units (a) and (b) enjoy super additive value synergies if their joint value is greater than the sum of their individual values: Value (a, b) > Value (a) + Value (b). They enjoy sub-additive cost synergies (or economies of scope) if the use of common factors of production reduces joint production costs of the business units: Cost (a, b) < Cost (a) + Cost (b).

The first dimension of IT relatedness—the use of common IT infrastructure technologies—captures IT synergies arising from tangible IT resources. The second, third, and fourth dimensions—coordinated IT strategies, pooled negotiation power, and shared know-how—capture IT synergies arising from intangible IT management expertise.

While the four dimensions of IT relatedness are distinct, they are also interdependent. IT infrastructures, IT human resources, IT vendor relations, and IT strategies are complementary (Ross et al. 1996). They mutually support and reinforce each other.

Diversification level refers to the extent to which a firm operates in distinct business segments (industries) simultaneously (Palepu 1985). Increasing diversification level increases the number of business segments in which the firm operates, and limits the firm's ability to coordinate IT resources and management processes across those businesses.

Hypotheses:
• H1a. Super-additive value synergies arising from the complementarity of the four dimensions of IT relatedness have a positive effect on corporate performance of a multibusiness firm.
• H1b. Sub-additive cost synergies arising from the individual dimensions of IT relatedness have independent positive effects on corporate performance of a multibusiness firm.
• H2. Diversification level of a firm moderates the relationship between cross-unit IT synergy and firm performance: Performance effects weaken increasing levels of diversification

Which is an example of the productivity paradox?

This brings us back to the productivity paradox; computers are very good replacing people when the jobs that people do can be captured mathematically and are dull and repetitious, but when computers augment a job – where IT is used as a tool by users to help do their job – the benefits of doing so are much more ...

What is productivity paradox What are the causes of this phenomenon?

The productivity paradox (also the Solow computer paradox) is the peculiar observation made in business process analysis that, as more investment is made in information technology, worker productivity may go down instead of up. Tải thêm tài liệu liên quan đến nội dung bài viết What is the productivity paradox quizlet?

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