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ESSAYS ON INFORMATION AND COMMUNICATION TECHNOLOGY: INVESTMENT, POST-ADOPTION, AND ECONOMIC IMPACTS ROYA (ROGHIEH) GHOLAMI (B.Sc. K.N. Toosi University of Technology) A THESIS SUBMITTED FOR THE DEGREE OF DOCTOR OF PHILOSOPHY DEPARTMENT OF INFORMATION SYSTEMS NATIONAL UNIVERSITY OF SINGAPORE 2005 AKNOWLEDGEMENTS Many individuals have helped in one way or another in the accomplishment of this thesis. Without the help of such very special people, this research may not been able to produce the intended results. Therefore I would like to take this opportunity to express my gratitude for their constant support, guidance, and dedications in making this thesis possible. I would like to thank my supervisors Dr. Tom Lee and Dr. John Lim for their advice and guidance throughout the duration of this thesis. Tom has been an invaluable source of inspiration and support throughout the study. He has always been accessible for discussions and for providing advice and mentoring at any time of need. Prof. Lim has been a senior mentor who has always provided support and resources for the study. The combination of their support has been instrumental for this work. More importantly, I am grateful to them for accommodating my interests and directing them towards a research worthy effort. All this would not have been possible without their openness and thoughtful interventions. I look forward to working with them in the future as well. Faculty members at the National University of Singapore and external universities have contributed to the success of this study. Dr. Hui Kai-Lung, Dr. Calvin Xu Yunjie, Dr Rudy Setiono, Dr. Khim Yong Goh, Dr. Almas Heshmati, Dr. Saeed Moshiri, Dr. John L. King, Dr. K.L Kraemer, Dr. Michael Myers, Dr. Jyoti Choudrie, Dr. Shanton Chang, Dr. Moez Lymayem, and Dr. Heejin Lee gave interesting and useful suggestions for carrying out this piece of research work. Several anonymous editors and reviewers of journals and conferences offered comments to upgrade the quality of this work. I would like to extend my deep appreciation to School of Computing of NUS for the rich research resources and financial support. To my lab-mates in particular Xu Heng and Rangamani B. Venkatarayappa, I wish to express my appreciation of their time and effort that has helped me in one way, or another. This thesis owes a special debt to my friends Zahra Mehrizi, Shirin Karimpour, Mostafa Rastin, Pari Jalali, Payam Khashaee, Khadijah Alattas, and Ilham for their continuous inspiration and support. Last, but not least, I would like to thank my family for their love and support. This thesis would have not been possible without their forbearance, and support during the many months that I spent working on this peace of work. The thesis, as well as what I am being today, is made on their shoulders. My parents who though not physically present in Singapore have always been a source of encouragement for me. ii CONTENTS Page Title……………………………………………………………………………………………… i Acknowledgement……………………………………………………………………………… ii Contents …………………………………………………………………………………….… .iii List of Publications……………………………………………….…………………………….vii List of Figures……………………………………………………………………………….…viii List of Tables…………………………………………………………………………………….ix Summary … .…… .…………………………………………………………………………… x Chapter ………………………………………………………………………………… .…1 Introduction………………………………………………………………………………………1 1.1 Background…………………………………………………………………… …….1 1.2 Definition of Information and Communication Technology (ICT)……………… 1.3 Time Series Analysis in the Assessment of ICT impact at the Aggregate LevelLessons and Implications in the New Economy…………………………………… 1.3.1 1.4 The Causal Relationship between Information and Communication Technology and Foreign Direct Investment………………………………………………… …… .8 1.4.1 1.5 Potential Contributions of the study……………………………………………12 Broadband Internet Usage……….……………… . ………………… .… .…… .13 1.6.1 1.7 Potential Contributions of the Study …………………………………………….9 International Spillovers of Information and Communications Technology (ICT)… 10 1.5.1 1.6 Potential Contributions of the Study………………………………………… Potential Contributions of the Study ………………………….……………… 14 Significance of the Study and Research Scope………………………………………15 Chapter ………………………………………………………………………………….….19 Time Series Analysis in the Assessment of IT impact at the Aggregate Level - Lessons and Implications in the New Economy…………………….……………………………………….19 2.1 Introduction ………… .……………………………………………………… … .20 2.2 Methodology …………………………………………………………………… 25 2.2.1 Production Function…………………………………………………………….25 2.2.2 Solow’s Residual …… .…………………… .……………………………… 26 iii 2.2.3 Unit Root Test……………………………………………………………… …28 2.2.4 Johansen Cointegration Test…………………………………… .…………….28 2.2.5 Granger Causality Test…………………………………… .………………….29 2.2.6 Error Correction Model…………………………………………………………31 2.2.7 Impulse Response Function…………………………………………………….31 2.3 Data …… .…………………………………… .…………………………… ……32 2.4 Empirical Results and Discussion………………………… .………………………34 2.4.1 Group1: Long and Short-run Interrelation of Economic Growth with ICT 37 2.4.2 Group2: Long-run Equilibrium of National Productivity with ICT……………….38 2.4.3. Group3: Short-Run Association of ICT with Economic Growth …………… .…39 2.4.4 Group 5: Causality from National Productivity to ICT……………………………41 2.5 Research and Policy Implications ……………………………………………………42 2.6 Limitations and Concluding Remarks………………… .…………………….…43 Chapter ………………………………………………………………………………….….47 The Causal Relationship between Information and Communication Technology and Foreign Direct Investment…………………………………………………………………… 47 3.1 Introduction ………………………………………………………….………………….48 3.2 The impacts of FDI on economic growth……………………………………………… 51 3.2.1 Determinants of inflow of FDI: Conceptual Framework…. ……………………….53 3. Data…………………………………………………………………………………… 58 3. Research Model………………………………………………………… …………….59 3.4.1 Time series Granger causality analysis …………………………………………….59 3.4.2 Panel data causality analysis……………………………………………………… 60 3.4.3 A method of instrumental variables………………………… .……………………62 3. 3.6 Empirical Results and Discussion…………………………………………………… 63 3.5.1 Test Results………………………………………………………………… …63 3.5.2 Discussion and Implications……………………………………………………67 Limitations, Future Research and Concluding Remarks……………………… ………70 iv Chapter 4…………………………………………………………………………………… .72 International Spillovers of Information and Communications Technology (ICT)…… 72 4.1 Introduction………………………………………… ………………………………….73 4.2 Does ICT spillover matter for TFP growth? A Review of Literature…………… .… 78 4.3 4.2.1 Why TFP growth is important? …………………………………………… .…79 4.2.2 Endogenous Growth Theory ……………………………………………… .…80 4.2.3 ICT as a General Purpose Technology…………………………… .…….……81 4.2.4 Earlier Studies on Non-Traditional Effect of ICT ………………………… …82 Modeling the ICT Impact on TFP……………………………………… ………… .…84 4.3.1 Control for R&D Investment………………………………………………… .89 4.4 Data …………………………………………………………………………………… 90 4.5 Estimation Results…………………………………… .……………………………… 94 4.6. Discussion, Implications, limitations and future research…… .…………………… …96 4.7 Conclusion ……….…………………………………………… …………………… …99 Chapter 5……………………………………………………………………………….… 101 Broadband Internet Post-Adoption………………………………………………….… …101 5.1 Introduction……………………………….……………………………………………102 5.2 Motivation of the Study: Why Broadband? ………………………………… …… .104 5.3 Broadband Usage in Singapore ………………………………………………….… 106 5. Theoretical Background: A Brief Review of Literature……………………………….107 5.4.1 IS Continuance Model ……………….………………………………… … .108 5. Research Model and Hypotheses… .…………… ……………………………… …112 5.6 Research Methodology……….……………………………………………………….113 5.6.1 Overview…………………………………….…………………………… .…113 5.6.2 Measurement Issues…………………………………………….…………… 113 5.6.3 Operationalization of Model Variables………… .………… .………………114 5.6.3.1 Perceived Usefulness………………………… ……………………115 5.6.3.2 Satisfaction… .………………………………………………… .…116 5.6.3.3 Confirmation .….……………………………………………………116 5.6.3.4 Continuance Intention ……… ……………………………………117 5.6.3.5 Continuance… .……………… ……………………….………… 117 v 5.7 Content Validity………………………………………………………… .………… .118 5.8 Administration of Survey Methodology…………………………………… .……… 120 5.9 5.10 5.8.1 Identification of the Sample…………………………………….………… …121 5.8.2 Survey Response…………………………………………………….…… .…122 Data Analysis (Statistical Technique)……………………………………………….…124 5.9.1 Structural Equation Modeling…………………………………………………124 5.9.2 Partial Least Squares (PLS) ………………………………………… ………126 5.9.3 Testing the Psychometric Properties of the Constructs by PLS………………127 5.9.4 Internal Consistency Reliability …………………………………… … …128 5.9.5 Convergent Validity…………………………………………………… .……128 5.9.6 Discriminant Validity………………………………………………………….140 5.9.7 PLS Structural Model…………………………………………………………141 5.9.8 External Validity………………………………………………… ……… …143 Discussion and Implications………… ……… ………………………………… …145 5.10.1 5.11 Research and Policy Implications…………………………… .………….…145 Concluding Remarks… ………………………………………………………………146 5.11.1 Contributions of the Study……………………………………………… .…146 5.11.2 Limitations………………………………………………………………… 147 5.11.3 Future Research………………………………………………………… …150 References…………………………………………………………………………… … .… 151 APPENDIX A – Survey Questionnaire…………………………………… …………………………170 vi List of Publications: 1. Sang-Yong Tom Lee, Roghieh Gholami, Tan Yit Tong (2005), Time Series Analysis in the Assessment of ICT Impact at the Aggregate Level – Lessons and Implications in the New Economy, Information and Management, 42, 1009–1022. 2. Roghieh Gholami, Sang-Yong Tom Lee, and Almas Heshmati (2006), The Causal Relationship between Information and Communication Technology and Foreign Direct Investment, World Economy 29 (1), 43-62. 3. Roghieh Gholami, Saeed Moshiri, and Sang-Yong Tom Lee (2004), ICT and Technical Efficiency of the Manufacturing Industries in Iran, Electronic Journal of Information Systems in Developing Countries, 19 (4), 1-19. 4. Guo Xiao Jia, Roghieh Gholami, Sang-Yong Tom Lee, (2006), International Spillovers of Information and Communication Technology (ICT): A Panel Study, Paper submitted to ISR. 5. Roghieh Gholami, John Lim, and Sang Yong Tom Lee (2006), A Survey on PostAdoption of Broadband Internet, work in progress. vii LIST OF FIGURES Figure 2.1 Impulse Response Function……………………………………………………… …46 Figure 3.1 Impact of ICT on Coordination and Transaction Costs…………………………… 56 Figure 5.1 Post-Acceptance Model of IS Continuance ………………………………… .……111 Figure 5.2 Structural Model……………………………………………………………….……142 viii LIST OF TABLES Table 2.1 Descriptive Statistics………………………………………………………………… 33 Table 2.2 Results of Unit Root Test and Co-integration Test……………………………………35 Table 2.3 Results of Granger Causality Test………………………………………………… .36 Table 3.1 Results of ADF Unit Root and Granger-Causality Tests………………………… .…65 Table 3.2 Results of Johansen Co-integration Test ………………………………………… …66 Table 3.3 Results of Panel Causality Tests from LSDV and Instrumental Variable Estimation .67 Table 4.1 Grouping Information………………………………………………………… ….88 Table 4.2 Bilateral Imports (Imij) for year 2001…………………………………………… .92 Table 4.3 Summary Data for year 2001……………………………………………………… 93 Table 4.4 Summary of Regression Results………………………………………………………94 Table 5.1 Operationalization of Perceived Usefulness…………………………………………115 Table 5.2 Operationalization of Satisfaction……………………………………………… .…116 Table 5.3 Operationalization of Confirmation……………………………………………….…116 Table 5.4 Operationalization of Continuance Intention………………….………………….….117 Table 5.5 Operationalization of Continuance… .…………………………………………… .117 Table 5.6 List of Measures……………………………………………… ………………….…119 Table5.7 Descriptive Statistics of Respondents………………………… …………………….123 Table 5.8 Normality Tests of Model Variables……………………………………… ……….127 Table5.9 Psychometric Properties of the Constructs………………… ………………… .…130 Table 5.10 Discriminant Validity of Constructs………………………… ………………… 140 Table 5.11 Structural Model……………………………………………………………………143 Table 5.12 Response Bias Results…………………………………………………………… .144 ix SUMMARY The impact of information and communications technology (ICT) on economic performance has become a key area of research in the field of IS. The surge of this research area is attributed to the important and mysterious role ICT has played in firms, industries as well as economies as a whole. As a result, evaluating the contributions of ICT investment on economic growth and understanding the determinants of its adoption and usage have always been elusive but important goals of IS researchers and economists. In spite of legitimate concerns about measurement, data, and statistical models, the evidence of positive and significant productivity gains related to ICT investment is still strong. However, a positive contribution does not tell us whether we are grossly over- or underestimating ICT impacts. From the management standpoint, simply knowing that the overall contribution is positive is not enough. Indeed the magnitude of the contribution is more important than the sign in guiding future ICT spending. 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(2002), Productivity Spillovers from Foreign Direct Investment in Poland, Economic Systems, 24 (3), 223-256. 160 Survey Questionnaire Dear Sir/Madam Dial-up connections to the Internet can handle only a small amount of information at a time by telephone lines, resulting in the frustratingly slow downloads. Broadband, such as ADSL or cable network, can handle a large amount of information simultaneously leading to much faster information transmission compared to dial-up connections. The impact on business productivity can be remarkable. This questionnaire is being administered to important organizations in Singapore as part of a research study on organizational Broadband Internet usage behavior. Being the key decisionmaker, your views on the issue of Broadband Internet continuance are extremely important. We assure you that all responses will be kept strictly confidential. Only group statistics will be published. Your responses will help formulate an understanding of the issues involved in Broadband Internet usage, which would have important policy implications. The success of this project therefore depends on your organization’s participation and response. As a token of our appreciation, a copy of our research findings report will be given to all respondents. We would appreciate if you could complete the questionnaire and return to us in the selfaddressed envelope by 15 April 2004. If you have any questions, please contact our research assistant, Ms. Roya Gholami, at 6874-2767. Thank you for your cooperation. Dr. John Lim Associate Professor Department of Information Systems National University of Singapore Dr. Tom Lee Assistant Professor Department of Information Systems National University of Singapore 27 February 2004 161 Survey on Broadband Internet Adoption The Broadband revolution has been acknowledged as the future of the Internet. Broadband Internet connectivity significantly improves the Internet experience through faster browsing of the web, emailing and downloading of files. Moreover there are some emerging applications, which require a broadband connection to make them usable in practice including Videoconferencing; Web casting; Content intensive e-commerce applications; Telecommuting and so on. Definition: According to the Infocomm Development Authority of Singapore (IDA), if your organization has access to Internet via any of the following types of connection you are a Broadband user. Please indicate the type of the connection(s) you are using in your organization, if applicable. [ ] Asymmetrical Digital Subscriber Line (ADSL) [ ] Cable Modem (e.g. Starhub Cable Vision) [ ] Leased Line/ ATM Link [ ] Integrated Services Digital Network (ISDN) [ ] Local Area Network (LAN) [ ] Wireless (LAN) Important Note: If your organization is a Broadband Adopter please answer the questions 1-5 based on your experience of Broadband Internet usage. If your organization is a Non-Adopter please answer questions 1-5 based on your expectations of Broadband Internet usage in future. Please circle the one selection that most represents your perspective for the question. 1. This section solicits your perception on the usefulness of Broadband Internet usage. Using Broadband Internet… Strongly Disagree a. Helps employees to accomplish tasks more quickly ----------- b. Improves job performance of employees -------------------------- c. Improves quality of work ------------------------------------------------ d. Makes it easier for employees to jobs -------------------------- e. Allows organization to accomplish more work ----------------- f. Enhances organization’s effectiveness ---------------------------- g. Gives organization greater control over work ------------------ h. Increases organization’s productivity ------------------------------ i. Is useful to your organization ------------------------------------------ 3 3 3 3 4 4 4 4 5 5 5 5 Strongly Agree 7 7 7 7 162 2. This section solicits your perception on your satisfaction of Broadband Internet usage. How you feel about your overall experience of Broadband Internet use? a. Dissatisfied--------- b. Displeased --------- c. Frustrated ---------- d. Terrible ------------ 2 2 3 3 4 4 5 5 6 6 7 7 ----------- Satisfied ------------ Pleased ------------ Contented ------------ Delighted 3. This section solicits your perception on the degree to which organization’s expectations about Broadband Internet usage are confirmed. Strongly Disagree Strongly Agree a. Experience with using Broadband Internet was better than what was expected --------------------------------------------- b. The benefits provided by Broadband Internet were better than what was expected --------------------------------------------- c. Overall, most of the expectations from using Broadband Internet were confirmed ------------------------------------------ 4. This section solicits your perceptions on your organization’s Broadband Internet continuance intention. All things considered… Strongly Unlikely Strongly Likely a. Organization would like to continue the usage of Broadband Internet during the next months ------------------------------------- b. Organization expects to continue using Broadband Internet during the next months ------------------------------------------------- c. It is likely that organization will continue to use Broadband Internet during the next months - ---------------------------------- 5. This question solicits your perception on your organization’s continuance pattern after initial adoption. During the last months in your organization, Broadband Internet has been used . a. Very intensively (many hours per day) ------------------ b. Very frequently (many times per day) ------------------- c. For a great variety of applications ------------------------ d. Overall a lot----------------------------------------------- Strongly Disagree 2 2 3 3 4 4 5 5 Strongly Agree 7 7 163 Demographic Information Please provide demographic information of your organization. a. Where is your organization’s country of origin? [] Australia/New Zealand [] Japan [] Joint Ventures [] Malaysia [] Singapore [] Taiwan [] United Kingdom [] Other European countries [] United States [] Others, please specify ---------------- b. What is your organization’s primary business activity? [] Computer Industry: Software Services/Consultants/Vendors [] Construction and Engineering [] Education [] Entertainment [] Finance: Banking/Insurance [] Food [] Manufacturing [] Medical and Legal Services [] Petroleum and Chemical [] Trade: Wholesale/Retail [] Transportation Services [] Travel, Tourism and Leisure Services [] Utilities and Communications [] Others, please specify ---------------c. How many employees are working in your organization? [] - 50 [] 750 – 999 [] 50 - 99 [] 100 –249 [] 1000 – 2499 [] 2500 – 4999 [] 250 – 499 [] 5000 – 9999 [] 500 – 749 [] 10000 or more d. What is your functional area? [] Accounts [] Finance [] Human Resources [] Information Systems [] Marketing [] Product Development [] Operations [] Research and Development [] Sales [] Strategic Planning [] Others, please specify --------------e. How long have you been working in this organization? [] years ≤ [] 1< years ≤ [] 15< years ≤ 20 [] 20< years ≤ 25 [] 5< years ≤ 10 [] 10< years ≤ 15 [] 25< years ≤ 30 [] 30 < years 164 f. What is your formal job title in the organization? [] President/CEO [] MIS Director [] Vice-President [] MIS Specialist [] Controller [] General Manager/Business Manager [] Other executives (depending on organization’s structure), please specify --------------- g. How long have you been in your current position? [] years ≤ [] 1< years ≤ [] 15< years ≤ 20 [] 20< years ≤ 25 [] 5< years ≤ 10 [] 25< years ≤ 30 [] 10< years ≤ 15 [] 30 < years h. How long is your experience of computer usage? [] years ≤ [] 1< years ≤ [] 5< years ≤ 10 [] 10< years ≤ 15 [] 15< years ≤ 20 [] 20< years ≤ 25 [] 25< years ≤ 30 [] 30 < years i. Which connectivity channel does your organization use to access Internet? [] No Access [] Dial-up i-1. How long has your organization used Dial-up Internet? [] months ≤ [] 1< month ≤ [] 12 < months ≤ 24 [] 24 < months ≤ 36 [] 6< month≤ 12 [] 36 < months [] Don’t know [] Broadband i-2. How long has your organization used Broadband Internet? [] months ≤ [] 1< month ≤ [] 12 < months ≤ 24 [] 24 < months ≤ 36 [] 6< month≤ 12 [] 36 < months [] Don’t know i-3. How long has your organization used dial-up Internet before adopting Broadband? [] No Access [] months ≤ [] 12 < months ≤ 24 [] 24 < months ≤ 36 [] 1< month ≤ [] 6< month≤ 12 [] 36 < months [] Don’t know Thank you for your cooperation 165 [...]... Information and Communication Technology (ICT) The acronym ICT is used to denote a concept which is a combination of two previously unrelated concepts, (1) information technology and (2) communication technology Information technology (IT) is the term used to describe the equipment and software elements that allow us to access, retrieve, store, organize, manipulate and present information by electronic... FDI and the well-known positive impacts of FDI inflows on national growth, little knowledge is available on the indirect impact of ICT on economic growth through the channel of FDI 1.4.1 Potential Contributions of the Study In section 2 “The Causal Relationship between Information and Communication Technology and Foreign Direct Investment”, we examine the existence and nature of any causal relationship... individual uptake and continuance In response, this study tries to identify the key drivers of Broadband Internet continuance in Singapore 1.6.1 Potential Contributions of the Study In the last section of this thesis ”Broadband Internet Post- Adoption we examine the factors influencing Broadband Internet continuance after initial adoption by conducting a survey on 1500 organizations in Singapore Therefore,... knowledge-based one According to the well-known management expert, Peter Drucker, “In today’s economy, the most important resource is no longer labor, capital, or land; it is knowledge” (Drucker, 1993) The rapid development and spread of information and communication technology (ICT) in the 1990s contributed to advancing industries and improving economic productivity of the countries and regions that embraced... Level - Lessons and Implications in the New Economy Although the positive association between ICT and growth is acknowledged (Miller et al., 1987; Brynjolfsson, 1993, 1996; Mukhopadhyay et al., 1995; Dewan and Min, 1997; Brynjolfsson and Hitt, 1995, 1996, 1998; Oliner and Sichel, 2000; Jorgenson and Stiroh, 2000a; Bosworth and Triplett, 2000; Nirup et al., 2000; Jorgenson, 2001; Council of Economic Advisers,... communication technology is still chronicled in many macroeconomic studies, because the impacts on productivity and economic growth have been much harder to detect Therefore, better measurement methods and definitions are definitely required for more precise appraisal, especially in the Internet and ecommerce era Jorgenson and Stiroh (2000) commented: “Only as the statistical agencies continue their... some lights on related policy making 1.4 The Causal Relationship between Information and Communication Technology and Foreign Direct Investment In economic growth literature, factors like savings and investment (in classical models), technical progress (in neo-classical models), R&D, human capital, accumulation and externalities (in new growth theory) have been recognized as the causes of economic growth... through the digitization of office work, and the availability of applications and notifications online as ICT is introduced into governments and the public sector ICT is contributing to improving people’s lives as it is increasingly being introduced into social sectors, such as through the diffusion of e-learning in the education sector In these ways, information and communication technology is a very... TFP The current study can help to address these questions, and provide new insights in the extent of ICT-related spillovers 1.5.1 Potential Contributions of the Study In section 3 “International Spillovers of Information and Communications Technology (ICT)”, we look for the non-traditional effect of ICT on productivity through spillover effects based on endogenous growth theory The other important objective... Communication technology (CT) is the term used to describe equipment, infrastructure, and software through which information can be received and accessed, for example phones, faxes, modems, digital networks, and DSL lines ICT is then the result of the convergence of IT and CT technologies One early example of ICT convergence is the crossing of photocopy machine and telephone, leading to the creation . ESSAYS ON INFORMATION AND COMMUNICATION TECHNOLOGY: INVESTMENT, POST- ADOPTION, AND ECONOMIC IMPACTS ROYA (ROGHIEH) GHOLAMI (B.Sc. K.N. Toosi University of Technology) . Definition of Information and Communication Technology (ICT) The acronym ICT is used to denote a concept which is a combination of two previously unrelated concepts, (1) information technology and. Economy, Information and Management, 42, 1009–1022. 2. Roghieh Gholami, Sang-Yong Tom Lee, and Almas Heshmati (2006), The Causal Relationship between Information and Communication Technology and