Information Technology and Value Creation in the Public Sector Organizations.

Abstract

In this dissertation, I study the performance impact of information technology (IT) investments in the public sector. IT has been one of the key assets in public administration since the early MIS era. Even though the information systems (IS) discipline has witnessed a considerable amount of research efforts on the subject of IT business value for the last couple of decades, the study on IT value in governments has not been as extensive as in the for-profit domain. A broad range of literature search in the areas of IS, public administration, public economics, and political sciences shows that there have been a limited number of quantitative empirical studies on the performance impact of IT in public organizations. To fill this gap in the literature, the dissertation presents three studies with distinctive theoretical examining the IT value in the public sector. In the first study, drawing upon the public value management perspective from public administration and the literature on IT resources in the IS discipline, I lay a theoretical foundation for the mechanism in which IT resources contribute to the generation of public value. Specifically, I argue that IT resources create public value by facilitating the four key organizational capabilities in governments - operational capability, communication capability, partnering capability, and innovative capability. In the second study, I empirically measure the cost efficiency effect of IT investments in the context of U.S. state governments. Estimation with a stochastic frontier estimation approach with the cost function framework shows that there is a significant efficiency improvement effect of IT in state governments. In the third study, the performance effect of IT is analyzed from the government growth perspective. Theories on government growth in political sciences and public economics provide theoretical predictions on the influence of IT on government expenditures as well as a basis for empirical estimation. I find that IT investments are associated with smaller expenditure size in U.S. state governments. Overall, this dissertation contributes to the literature by offering a theoretical framework, empirical methodologies, and conclusive evidence showing the value creation effect of IT in the public sector.