LITERATURE REVIEW
Revisiting IS business value research: what we
already know, what we still need to know,
and how we can get there
Guido Schryen
Institute of Management Information Systems,
University of Regensburg, Regensburg, Germany
Correspondence: G. Schryen, Institute of
Management Information Systems,
University of Regensburg,
Universita
¨
tsstraße 31,
Regensburg 93053, Germany.
Tel: 49 941 943 5634;
Fax: 49 941 943 5635;
E-mail: guido.schryen@
wiwi.uni-regensburg.de
Received: 24 September 2009
Revised: 22 March 2010
2nd Revision: 6 December 2010
3rd Revision: 29 July 2011
4th Revision: 5 February 2012
5th Revision: 24 April 2012
6th Revision: 10 June 2012
Accepted: 29 August 2012
Abstract
The business value of investments in Information Systems (IS) has been, and is
predicted to remain, one of the major research topics for IS researchers. While
the vast majority of research papers on IS business value find empirical evidence
in favour of both the operational and strategic relevance of IS, the fundamental
question of the causal relationship between IS investments and business value
remains partly unexplained. Three research tasks are essential requisites on the
path towards addressing this epistemological question: the synthesis of existing
knowledge, the identification of a lack of knowledge and the proposition of
paths for closing the knowledge gaps. This paper considers each of these
tasks. Research findings include that correlations between IS investments and
productivity vary widely among companies and that the mismeasurement of IS
investment impact may be rooted in delayed effects. Key limitations of current
research are based on the ambiguity and fuzziness of IS business value, the
neglected disaggregation of IS investments, and the unexplained process of
creating internal and competitive value. Addressing the limitations we suggest
research paths, such as the identification of synergy opportunities of IS assets,
and the explanation of relationships between IS innovation and change in IS
capabilities.
European Journal of Information Systems (2013) 22, 139–169.
doi:10.1057/ejis.2012.45; published online 13 November 2012
Keywords: IS business value; IS research framework; IS impact; IS value; research
agenda; literature review
Introduction
The business value of investments in Information Systems (IS) has been,
and is predicted to remain, one of the major research topics for IS
researchers (Dehning et al, 2004; Roztocki & Weistroffer, 2008). While only
a few, mostly early studies (Dos Santos et al, 1993; West & Courtney, 1993;
Hitt & Brynjolfsson, 1996; Rai et al, 1997; Im et al, 2001) doubt the
economic power of IS, the vast majority of research papers on IS business
value (e.g. (Dedrick et al, 2003; Dehning et al, 2003, 2008; Peslak, 2003;
Santhanam & Hartono, 2003; Swierczek & Shrestha, 2003; Mahmood &
Mann, 2005; Zhang, 2005; Shin, 2006; Lin & Shao, 2006a; Aral et al, 2007;
Beccalli, 2007; Neirotti & Paolucci, 2007; Wan et al, 2007; Kohli & Grover,
2008; Kim et al, 2009; Ramirez et al, 2010; Han et al, 2011; Kim & Mithas,
2011; Lee et al, 2011)) find empirical evidence and theoretical argu-
ments in favour of both the operational and strategic relevance of IS.
The p rominent, but non-academic Har vard B usines s article by Carr
(2003), entitled ‘IT doesn’t matter’, has also been refuted (Schrage, 2003;
European Journal of Information Systems (2013) 22, 139–169
&
2013 Operational Research Society Ltd. All rights reserved 0960-085X/13
www.palgrave-journals.com/ejis/
DeJarnett et al, 2004). However, as Baker et al (2008)
argue, the fundamental question of the causal relation-
ship between IS investments and business value remains
partly unexplained. In addition, new IS and new IS
phenomena lead to more questions over time that require
addressing. IS researchers have not fully managed to
identify and explain the economic relevance of IS (Fink,
2011) so that business executives and researchers con-
tinue to question the value of IS investments (Kohli &
Grover, 2008). However, finding an answer to this
question is regarded as fundamental to the contribution
of the IS discipline (Agarwal & Lucas, 2005).
Despite this epistemological deficiency in IS business
value research, statistics on papers published in pertinent
academic outlets show that after a publication peak in 2000
the numbers of published articles on IS business value
declined (see Figure A1 in Appendix A). In particular , the
journals Management Information Systems Quarterly (MISQ),
Information Systems Research (ISR), Journal of Management
Information Systems (JMIS) and European Journal of Informa-
tion Systems (EJIS) have published only 10 articles on
IS business value since 2005. We hypothesise that this
decreasing attention to IS business value is not rooted in
any declining interest on the part of the editors and
reviewers of these journals, but is based on the declining
activities of researchers in this field. In order to reactivate
researchers’ interest and activities in the central field of IS
business value, this paper provides a fresh perspective on
the question of how IS investments create business value.
Three research tasks are essential requisites on the path
towards answering this question and strengthening the role
of IS (business value) research: (1) Synthesis of knowledge
(what do we know?) (2) Identification of lack of knowledge
(what do we still need to know?) (3) Proposition of paths
for closing the knowledge gap (how can we get there?).
While many research articles, including literature reviews,
address task 1, only few address task 2, and we rarely find
contributions like those of Soh & Markus (1995) and
Kohli & Grover (2008), which are dedicated to task 3. This
paper pursues the idea that all three research tasks should
be embedded into one logical flow. Consequently, its con-
tribution is threefold: it provides a synthesis of key research
findings, it identifies gaps in research, and it shows paths
for overcoming the current research limitations by provid-
ing a research agenda.
The remainder of this paper is structured as follows: The
next section frames IS business value research, as it is
understood in this work. Subsequently, we synthesise key
research findings before we identify research gaps. This is
followed by the presentation of a detailed agenda for future
IS business value research. Then we discuss the potential for
further research and present concluding remarks.
IS business value research
Information systems
The academic field of IS research is terminologically
pervaded with syntactically similar notions, such as
‘information system (IS)’, ‘information technology (IT)’,
and ‘information and communication technology (ICT)’.
These notions often lack any precise semantic definition
and differentiation, and they are often also based on
different understandings. Reviewing articles published in
Information Systems Research, Orlikowski & Iacono (2001)
find that the ‘IT artefact’ has not been theorised, and is
widely interpreted depending on the specific research
context. Having reviewed more than 300 papers related
to IS business value, we find that this problem still exists.
For example, only very few papers make explicit how
they define their research object. The notional fuzzi-
ness and heterogeneous semantics in literature are not
surprising, because the IS discipline does not yet provide
a broadly accepted or even standardised terminology. For
example, there are only few glossaries available (ITAA,
1996; CNSS, 2006; ATIS, 2007), which even differ in their
respective definitions of ‘IS’ and ‘IT’. In this review, we
adopt the ‘holistic’ view on IS, as described in the ATIS
Telecom Glossary (Option 3): The entire infrastructure,
organization, personnel, and components for the collection,
processing, storage, transmission, display, dissemination, and
disposition of information.
IS business value
Notions and scope
A wide range of articles on IS offers a
variety of notions and semantics regarding the economic
consequences of IS investments. For example, early works
use the notions ‘value’, ‘benefit’, ‘outcome’ or ‘worth’.
Berghout & Renkema (1997), Engelbert (1991), Wiseman
(1992) and Melville et al (2004) investigate the ‘organiza-
tional performance’, and Kohli & Grover (2008) refer to
value as the ‘economic impact’. The IS discipline still
lacks a consistent and widely accepted definition of IS
business value (Oz, 2005, p. 796). The variety in terminol-
ogy not only mirrors notional inconsistencies, it also
reflects different understandings (semantics) of how to
operationalise the economic impact of IS. For example, a
large subset of empirical studies analyses the relationship
between IS investments and productivity (Brynjolfsson &
Hitt, 1996), ‘Return on Sales’ (Bharadwaj, 2000) or Tobin’s
q (Brynjolfsson & Yang, 1999). Other studies stress that,
beyond financial and non-financial measures, intangible
assets can be affected, such as organisational capabilities
(Kohli & Grover, 2008) or strategic position (Irani, 2002).
The discussion becomes even more complicated when
researchers also distinguish between what the particular
outcome of an IS investment is, and how this outcome is
interpreted. For example, the interpretation of a parti-
cular outcome, such as a productivity gain, depends on
the view of the particular evaluator (Engelbert, 1991;
Sylla & Wen, 2002), on what competitors have achieved
(Dehning & Richardson, 2002) and on what is finally
done to exploit it (Alshawi et al, 2003). We use the afore-
mentioned facets of IS business value to structure the
presentation of the research findings.
Revisiting IS business value research Guido Schryen140
European Journal of Information Systems
Level of examination Literature suggests using different
levels to examine the economic impact of IS. One widely
used classification distinguishes individual level, firm
level, industry level and economy level (Bakos, 1987;
Kauffman & Weill, 1989; Brynjolfsson & Yang, 1996;
Devaraj & Kohli, 2000; Chau et al , 2007). In addition,
research can also focus on consumer surplus (Bakos,
1987; Brynjolfsson & Yang, 1996; Devaraj & Kohli, 2000).
The importance of taking the particular level of
examination into account is stressed by Dehning &
Richardson (2002, p. 8) and also by Brynjolfsson (1993),
who states that the usage of different levels even con-
tributes to the explanation of the ‘productivity paradox’.
Consequently, we take the level of examination into
account in the following synthesis of the research findings.
Object of evaluation Due to the holistic definition of IS,
investigations of the economic impact of IS investments
differ in their objects of evaluation. While some studies
consider overall IS investments, others are more specia-
lised and focus on particular IS assets, such as IT capital
(Hitt & Brynjolfsson, 1994; Barua et al, 1995), or IS
personnel and training (Chatterjee et al, 2001; Mahmood
& Mann, 2005). Similar to the level of examination,
differences in the object of evaluation are considered in
our analysis of results.
Time of evaluation As Kohli & Grover (2008) stress,
research on IS value can be of ex ante and ex post nature.
While the ex ante evaluation of IS value supports decision
makers in answering the question as to which of the
alternative IS investment(s) available will best achieve the
organisation’s goals or preferences, ex post research
investigates the extent to which IS investments have
actually created value. This paper focuses on the latter
aspect only.
Definition of IS business value Drawing on the aforemen-
tioned multiple facets of IS research, we define:
IS business value is the impact of investments in particular
IS assets on the multidimensional performance and cap-
abilities of economic entities at various levels, complemented
by the ultimate meaning of performance in the economic
environment.
The ultimate meaning of performance gains and losses
(outcome) refers to what is subsequently derived if the
outcome is exploited. For example, the outcome of intro-
ducing a workflow management system may be that a
business process can now be performed more quickly. The
ultimate meaning of the outcome comes from what is done
with the time saved, and it also depends on the extent to
which competitors have speeded up their processes.
Theoretical paradigms used in IS business value
research
Researchers have employed many theoretical paradigms
when analysing the value that IS creates for organisations.
These include microeconomics, industrial organisation
theory, socio-political paradigms, organisational beha-
viour theory, resource-based view (RBV) and decision
theory (Hoogeveen & Oppelland, 2002; Melville et al,
2004; Pare
´
et al, 2008).
In the field of microeconomics, the theory of produc-
tion (Brynjolfsson, 1993; Brynjolfsson & Hitt, 1995;
Lichtenberg, 1995; Brynjolfsson & Yang, 1996; Dewan &
Min, 1997; Dedrick et al, 2003), growth accounting
(Jorgenson & Stiroh, 1999; Brynjolfsson & Hitt, 2003),
consumer theory (Brynjolfsson, 1996; Hitt & Brynjolfsson,
1996) and option pricing theory (Benaroch & Kauffman,
1999) have been employed. Industrial organisation
theory has been adopted by researchers who have applied
game theory (Belleflamme, 2001), agency theory and
contract theory (Clemons & Kleindorfer, 1992; Bakos &
Nault, 1997), and transaction cost theory (Clemons &
Row, 1991; Gurbaxani & Whang, 1991). Researchers have
used socio-political paradigms by applying the theory of
embeddedness (Chatfield & Yetton, 2000). Organisa-
tional behaviour theory was used by Devaraj & Kohli
(2000), and the RBV has been adopted in many studies
(Clemons & Row, 1991; Mata et al, 1995; Powell &
Dent-Micallef, 1997; Jarvenpaa & Leidner , 1998; Bharadwaj,
2000; Caldeira & Ward, 2003; Santhanam & Hartono,
2003; Melville et al, 2004). Beyond the adoption of
established theories, several researchers have also pro-
posed new theories, prominent examples being the
process theory of Soh & Markus (1995), the process-
oriented framework of Mooney et al (1995), and the
theoretical framework on the sustainability of competi-
tive advantage rooted in IS use (Piccoli & Ives, 2005).
We draw on some of the aforementioned theories in
our research agenda in terms of suggesting theoretical
foundations for research thrusts.
Synthesising research findings
The economic relevance of IS has been studied for many
years and 12 years ago it had already attracted more than
1000 research papers (Bannister & Remenyi, 2000). In
order to cover this abundance of literature systematically,
to synthesise key research findings and to identify research
problems, we conducted a comprehensive literature
search: We performed a title search in pertinent journal
databases and also scanned the table of contents of
pertinent journals, including MIS Quarterly, Information
Systems Research, Management Science, Journal of Manage-
ment Information Systems, Organization Science, among
others (see Appendix B for details on the search process).
The final body of literature considered in this study
consists of more than 200 articles. Based on prior work
(Schryen, 2010a, b), we also explored the following
literature reviews on IS business value, which have been
published since 1989 in peer-reviewed journals or peer-
reviewed conference proceedings: (Kauffman & Weill,
1989; DeLone & McLean, 1992; Brynjolfsson, 1993; Soh
& Markus, 1995; Brynjolfsson & Yang, 1996; Sircar et al,
1998; Seddon et al, 1999; Bannister & Remenyi, 2000;
Revisiting IS business value research Guido Schryen 141
European Journal of Information Systems
Chan, 2000; Devar aj & Kohli, 2000; Dehning &
Richardson, 2002; Irani & Love, 2002; Sylla & Wen,
2002; Dedrick et al, 2003; Melville et al, 2004; Piccoli &
Ives, 2005; Chau et al, 2007; Wan et al, 2007; Kohli &
Grover, 2008; Pare
´
et al, 2008).
Reviewing the large body of literature on IS business
value research reveals that this field is dominated by
empirical studies (Chen & Hwang, 1991; Chan, 2000;
Pare
´
et al, 2008) and econometric approaches,
the ex post perspective,
the adoption of variance theories in contrast to process
theories (Markus & Robey, 1988; Soh & Markus, 1995;
Sircar et al, 1998; Pare
´
et al, 2008),
a firm-level perspective (Chau et al, 2007; Wan et al,
2007; Pare
´
et al, 2008),
the analysis of firm performance in terms of produc-
tivity, market performance and accounting perfor-
mance, and the consideration of the complementary
influence of contextual factors and lag effects.
In order to organise the presentation of prior research,
we define and apply a new conceptual model, which is
based on a synthesis of four prominent IS business value
models (see Figure 1) proposed by Dedrick et al (2003),
Dehning & Richardson (2002), Melville et al (2004)
and Soh & Markus (1995). The advantage of drawing on
these research models lies in their wide adoption by
IS researchers, which allows us to map and assess the
research findings of IS business value literature appro-
priately. Our approach of synthesising these models is not
an attempt to unify (and simplify) different perspectives
applied by researchers, but it pursues the aim to identify
and present their shared understanding of IS business
value. We argue that this synthesis is useful in guiding
the presentation of key results in the IS business value
literature.
The four models shown in Figure 1 show consensus
with regard to the following basic insights:
1. The impact of IS investments can be assessed along
numerous performance measures, which can be divi-
ded into process performance measures and firm/
organisational performance measures. The latter can
be further divided into market measures and financial/
accounting measures. The impact of IS investments
on firm performance is mediated through process
performance.
2. The impact of IS investments on process performance
and firm performance is affected by contextual/
environmental factors on the firm, industry and coun-
try levels.
3. IS investments and resulting assets can occur in
different forms: they can consist of IT expenditures
(hardware, software, technical infrastructure), human
IS resources and IS management capabilities. IS invest-
ments are complemented with non-IS investments,
and together they affect process performance.
There is also strong empirical evidence in the literature
that the impact of IS investments also needs to account
for substantial time lags, which can span a period of years
(Brynjolfsson & Hitt, 1998; Santhanam & Hartono, 2003;
Jain, 2005; Mahmood & Mann, 2005). Synthesizing the
aforementioned key insights leads to the model shown in
Figure 2.
We now use this model to draw a condensed picture
of what the literature has found in key research areas
(see Table 1 for a summary of key findings).
Performance measures
One of the most important topics in the economic
appraisal of IS investments is the question of what to
measure. During the past 20 years, the body of literature
on the economic appraisal of IS investments has grown
enormously, and so has the number of economic mea-
sures investigated. For example, researchers have addressed
productivity (Brynjolfsson & Hitt, 1996, 2000), capacity
utilisation and product quality (Barua et al, 1995;
Thatcher & Oliver, 2001; Thatcher & Pingry, 2004b,
2007), customer satisfaction (Devaraj & Kohli, 2000),
production efficiency (Thatcher & Oliver, 2001) and
productive efficiency (Chen & Lin, 2009; Lin, 2009),
consumer welfare (Thatcher & Pingry, 2004a, b; Thatcher
& Pingry, 2007), various profit ratios, such as ‘Return
on Assets’ (Weill, 1992; Barua et al, 1995), and also
market-oriented measures, such as Tobin’s q (Bharadwaj
et al, 1999; Brynjolfsson & Yang, 1999).
The abundance of different aspects of IS success has
been addressed by researchers who provide taxonomies
to organise the diverse research studies (Ward, 1990;
Seddon, 1997; Irani & Love, 2002; Lee et al, 2008;
Marthandan & Tang, 2010). However, probably the most
frequently adopted classification is proposed by DeLone
& McLean (1992), who provide a comprehensive IS
success taxonomy that posits six dimensions: ‘system
quality’, ‘information quality’, ‘use’, ‘user satisfaction’,
‘individual impact’ and ‘organisational impact’. This
model was extended by Seddon (1997), updated with
minor refinements by DeLone & McLean (2003), and also
adopted in more recent research (DeLone & McLean,
2004; Chau et al, 2007). Complementary to the taxon-
omy of DeLone & McLean (1992), a simple and often
applied classification distinguishes between (business)
process performance and firm performance (Barua et al,
1995; Dehning & Richardson, 2002; Melville et al,
2004). This process-oriented perspective has been widely
adopted to show that the impact of IS investments on
firm performance is intermediated by process perfor-
mance (Barua et al, 1995; Mooney et al, 1995; Soh &
Markus, 1995; Shin, 1997; Dehning & Richardson, 2002;
Lee et al, 2004; Kim et al, 2006).
Summing up, both the DeLone and McLean model and
its extensions, and the process/firm performance per-
spective are widely accepted and are deemed appropriate
for the classification of performance measures.
Revisiting IS business value research Guido Schryen142
European Journal of Information Systems
As Measured by Researchers
ab
cd
Information
Technology
Measures:
1: Spending
2. Strategy
3. Management
or Capability
Process Measures
e.g. Gross Margin,
Inventory Turnover,
Customer Service,
Quality, Efficiency
Firm Performance Measures
A. Market
e.g. Event Study, Association
Study, Tobin’s q, Market Value
B. Accounting
e.g. ROA, ROE, ROS Market
Share
Contextual Factors
e.g. Industry, Size,
Financial Health, IT
Intensity
2
1
3
5
4
COMPLEMENTARY FACTORS
INPUTS PROCESS OUTPUTS
PRODUCTION SYSTEM
OUTCOMES
Economic performance:
Economic growth
Labor productivity
Profitability
Consumer welfare
Labor
Capital
IT Capital
Non-IT Capital
Improvements in the
production process
due to:
Capital deepening
Technical progress
Labor quality
Value-added
Measures at 3 levels:
Country level
Industry level
Firm level
Organization and management practices
Industry organization and regulation
Economic structure, government policy,
and investment in human capital
III. Macro Environment
II. Competitive Environment
Country
Characteristics
Industry
Characteristics
IT Resources:
Technology (TIR)
& Human (HIR)
Complementary
Organizational
Resources
Business
Processes
Organizational
Performance
Business
Process
Performance
Trading Partner
Resources &
Business
Processes
I. Focal Firm
IT Business Value Generation Process
“THE IT CONVERSION
PROCESS”
“THE IT USE
PROCESS”
“THE COMPETITVE
PROCESS”
IT
EXPENDITURE
ORGANIZATIONAL
PERFORMANCE
IT
IMPACTS
IT
ASSETS
• IT MANAGEMENT/
CONVERSION ACTIVITIES
• APPROPRIATE/
INAPPROPRIATE USE
• COMPETITIVE POSITION
• COMPETITIVE DYNAMICS
Figure 1 IS business value models in the IS literature. (a) Model of Dehning and Richardson (2002, p.10). Reproduced with permission of and r American Accounting
Association; (b) Production-oriented model (Dedrick et al, 2003, p.3) r 2003 Association for Computing Machinery, Inc., Reprinted by permission, http://dx.doi.org/10.1145/
641865.641866; (c) Process-oriented model (Soh and Markus, 1995, p.37). Reproduced with permission of the authors; (d) Resource-based model (Melville et al, 2004, p.293).
Copyright r 2004, Regents of the University of Minnesota. Used with permission.
Revisiting IS business value research Guido Schryen 143
European Journal of Information Systems
