Lorin M. Hitt

• Professor at University of Pennsylvania

We examine the role of AI analytics in facilitating innovation in firms that have gone through IPO. Using patent data on over 1,000 publicly traded firms, we find that firms acquiring AI analytics capability post-IPO experience less of a decline in innovation quality compared with similar firms that have not acquired that capability. This effect is...

Start-ups are increasingly using social media to signal quality and provide information to potential investors. However, the effectiveness of social media on venture capital (VC) financing is likely to be heterogeneous, differing by demographic and network characteristics of the founders. In this paper, we examine whether social media use can impro...

Search and experience goods, as well as vertical and horizontal differentiation, are fundamental concepts of great importance to business operations and strategy. In our paper, we propose a set of theory-grounded data-driven measures that allow us to measure not only product type (search vs. experience and horizontal vs. vertical differentiation) b...

We examine the relationship between data analytics capabilities and innovation using detailed firm-level data. To measure innovation, we first utilize a survey to capture two types of firm practices, process improvement and new technology development for 331 firms. We then use patent data to further analyze new technology development for a broader...

Data-analytics technology can accelerate the innovation process by enabling existing knowledge to be identified, accessed, combined, and deployed to address new problem domains. However, like prior advances in information technology, the ability of firms to exploit these opportunities depends on a variety of complementary human capital and organiza...

Secure messaging, or “e-visits,” between patients and providers has sharply increased in recent years, and many hope they will help improve healthcare quality, while increasing provider capacity. Using a panel data set from a large healthcare system in the United States, we find that e-visits trigger about 6% more office visits, with mixed results...

We test the hypothesis that work practices complement IT investment, in part, by accelerating how rapidly employees acquire the skills needed to use new IT systems. We combine support request data from an EMR vendor with survey responses on work practices from 962 employees from 15 client nursing homes. Nursing homes using work practices that prior...

This study examines how characteristics of an interfirm labor-flow network affect firm productivity. Using employee job histories to trace labor movement between organizations, we construct labor-flow networks for both information technology (IT) and non-IT labor and analyze how a firm’s network structure for the two types of labor affects its perf...

The authors investigate whether electronic medical record (EMR) systems are associated with higher levels of nursing home performance. Their difference-in-differences analysis is based on a survey of health care information technology (HIT) use in approximately 304 New York State nursing homes, combined with regulatory data from the Center for Medi...

Despite the rapid adoption of and increased spending on social media in the recent years, there is little existing research on the economic value of corporate social media investment or the factors that affect this value. In this study, we first provide empirical evidence using a large sample of firms across industries to show that firm market valu...

This study aims to understand how characteristics of a labor flow network affect firm productivity using an inter-firm hiring network constructed from individual job histories. We separate IT-labor from non-IT labor and use the network measures constructed from the two types of labor flow to evaluate how they affect firm performance. We find that h...

This article analytically and experimentally investigates how firms can best capture the business value of information technology (IT) investments through IT contract design. Using a small sample of outsourcing contracts for enterprise information technology (EIT) projects in several industries-coupled with reviews of contracts used by a major ente...

This paper examines factors affecting organizational learning rates for outsourced EMR implementations in a quasi-experimentally chosen group of New York nursing homes. We combine detailed support request data collected by the EMR vendor in charge of implementing the systems with survey responses on work practices from 962 employees in the fifteen...

The movement of information technology (IT) workers among firms is believed to be an important mechanism by which IT-related innovations diffuse throughout the economy. We use a newly developed source of employee microdata—an online resume database—to model IT workers' mobility patterns. We find that firms derive significant productivity benefits f...

A significant body of literature in information systems, marketing, and economics has shown the important implication of the distinction between experience products and search products (“product type”) on consumer information search, marketplace design, and firm strategy. However, how to empirically measure product types remains a challenge, and th...

Interest in innovative health care delivery models has increased due to measures such as the Affordable Care Act, which is designed to expand insurance coverage and contain health care costs. The goal of these innovations is to increase physician productivity without sacrificing quality of care. One innovation that has been forwarded as a low-cost...

We empirically examine the impact of expanded product variety due to the adoption of the Internet on demand concentration using two large data sets from the movie rental industry, at both the movie level and the consumer level. We find that increasing product variety diversifies the demand away from both hits and niche products defined in absolute...

The concept of “product type” (experience versus search product) is increasingly important in business research and practice. However, it is not defined or measured precisely in the Internet age due to significantly lower search cost and changes in consumer information search behavior resulting from reliance on information and communications techno...

As customers become more involved in executing service tasks, service performance is increasingly reliant on the efficiency and effectiveness of this customer co-production. While organizational and employee learning have been extensively studied, learning by customers in their role as co-producers is largely unexplored. To explore how customers le...

This paper examines the relationship between information technology (IT) and trademarks. Using an 11-year panel data set (1987–1997) of IT capital stock, trademark holdings, and other measures for 116 Fortune 1000 manufacturing firms, we find that IT contributes to higher trademark holdings. Further, we find evidence suggesting that firms with more...

We combine new information technology (IT) offshoring and IT workforce microdata to investigate how the use of IT offshore captive centers is affecting the skill composition of the U.S. onshore IT workforce. The analysis is based on the theory that occupations involving tasks that are “tradable,” such as tasks that require little personal communica...

No abstract available.

We investigate whether the implementation of electronic medical records is associated with higher levels of economic performance in nursing homes in terms of quality, profitability, cost, productivity, and efficiency. Our analysis is based on a survey of Healthcare Information Technology (HIT) usage for approximately 200 New York State Nursing Home...

Enterprise Resource Planning (ERP) software system integrates key business and management processes within and beyond a firm's boundary. While the business value of ERP implementations have been extensively debated in IT trade periodicals in the form of qualitative discussion or detailed case studies, there is little large sample statistical eviden...

We examine whether firms that emphasize decision making based on data and business analytics (“data driven decision making” or DDD) show higher performance. Using detailed survey data on the business practices and information technology investments of 179 large publicly traded firms, we find that firms that adopt DDD have output and productivity th...

This paper examines how information provided by online reviews influences firms’ pricing strategy for repeat purchase products. It is commonly understood that online reviews can reduce consumer uncertainty about product characteristics and, therefore, have the potential to increase product demand and firm profits. However, when considering repeat p...

We gather detailed data on organizational practices and information technology (IT) use at 253 firms to examine the hypothesis that external focus—the ability of a firm to detect and therefore respond to changes in its external operating environment—increases returns to IT, especially when combined with decentralized decision making. First, using s...

This paper examines the drivers of adoption of Internet banking and the linkages among adoption drivers and outcomes (product acquisition, service activity, profitability, loyalty). We relate Internet banking adoption to customer demand for banking services, the availability of alternative channels, customers' efficiency in service coproduction (“c...

This paper uses newly collected panel data that allow for significant improvements in the measurement and modeling of IT productivity to address some long-standing empirical limitations in the IT business value literature. First, we show that using GMM-based estimators to account for the endogeneity of IT spending produces coefficient estimates tha...

We show that regional differences in returns to information technology (IT) investments by US firms are attributable in part to IT spillovers generated by the flow of IT workers among firms. We use a newly developed source of employee micro-data with employer identifiers and location information to model IT workers' mobility patterns. Access to an...

Despite significant public, media, and academic interest in offshoring, there has been very little data available through which to assess how offshoring has affected US-based information technology workers. In this study, we use data from two new, nationally representative surveys to examine how offshoring has already affected the US based IT workf...

We investigate how organizational factors influence healthcare IT adoption costs, using new data collected from an EMR adoption experiment conducted in a sample of New York State nursing homes. We find that workplaces characterized by higher levels of employee satisfaction and employee discretion incur lower EMR implementation costs. Our estimates...

Consumer reviews may reflect not only perceived quality but also the difference between quality and price (perceived value). In markets where product prices change frequently, these price-influenced reviews may be biased as a signal of product quality when used by consumers possessing no knowledge of historical prices. In this paper, we develop an...

We show that substantial regional differences in returns to information technology (IT) investments by US firms are attributable in part to knowledge spillovers generated by the movements of IT workers among firms. We use a newly developed source of employee micro-data with employer identifiers and location information to model IT workers' mobility...

We combine new information technology (IT) offshoring and IT workforce microdata to investigate how the use of IT offshore captive centers is affecting the skill composition of the U.S. onshore IT workforce. The analysis is based on the theory that occupations involving tasks that are “tradable,” such as tasks that require little personal communica...

We use new sources of micro-data to estimate the short-run impact that H-1B employment has had on IT wages. Our primary data source describes employers, demographics, and wages for a segment of the US IT workforce. We integrate these data with external datasets describing employers’ H-1B applications, available through Department of Labor databases...

Online product reviews may be subject to self-selection biases that impact consumer purchase behavior, online ratings’ time series, and consumer surplus. This occurs if early buyers hold different preferences than do later consumers about the quality of a given product. Readers of early product reviews may not successfully correct for these prefere...

This paper proposes using nonlinear mixed-integer programming to solve the customized bundle-pricing problem in which consumers are allowed to choose up to N goods out of a larger pool of J goods. Prior work has suggested that this mechanism has attractive features for the pricing of information and other low-marginal cost goods. Although closed-fo...

We combine detailed survey data on firms’ organizational practices with information technology (IT) investment measures to test the hypothesis that in addition to decentralization, external focus is another important determinant of returns to IT investment. We argue that IT-intensive firms characterized by decentralization are able to more effectiv...

The measurement of the impact of IT spillovers on productivity is an important emerging area of research. Studies of IT spillovers often adopt a ‘production function’ approach commonly used for measuring R&D spillovers, in which an external pool of IT investment is modeled using weighted measures of the IT investments of other firms, industries, or...

Innovations in technology and service design have increasingly enabled firms to incorporate self-service technology to augment or substitute for "traditional" employee-provided service channels. Although it is clear that self-service can reduce cost, less is known about how customers utilize self-service channels in a multichannel service delivery...

The academic literature on hospital information technology is relatively sparse despite its important implications for hospital management, with only limited empirical evidence linking implementation of hospital IT systems with improvements in health care quality, financial and operational performance. This study aims to corroborate the observation...

We explore how broadband access drives changes in the quantity and diversity of consumption of online content by using panel data that describes household Internet usage before and after broadband adoption. Our data suggests that on average, broadband adoption increases usage by over 1300 minutes per month. We also find that information consumption...

We use panel data describing Internet usage before and after broadband adoption to explore how access to broadband drives changes in content consumption. We motivate our analysis with a model that accounts for access speed, the bandwidth intensity of different types of content and the opportunity cost of time to explain usage changes. Faster downlo...

We analyze how online reviews can be used to evaluate product differentiation strategy based on the theories of hyperdifferentiation and resonance marketing. Hyperdifferentiation says that firms can now produce almost anything that will appeal to consumers and can manage the complexity of diverse product portfolios. Resonance marketing says that in...

Intra-industry spillovers from information technology investments have been cited as a potentially important driver of productivity growth. Using firm-level data to measure the sizes of these spillovers, however, can be challenging because of biases caused by 1) measurement error and 2) the difficulty in separating the effects of spillovers from th...

We analyze how online reviews are used to evaluate the effectiveness of product differentiation strategies based on the theories of hyperdifferentiation and resonance marketing. Hyperdifferentiation says that firms can now produce almost anything that appeals to consumers and they can manage the complexity of the increasingly diverse product portfo...

Focusing on proving or disproving transaction cost economics has led to a relative neglect of some key drivers of vertical scope, such as differences in productive capabilities (as opposed to capabilities of governance). We consider how productive capability differences can shape vertical scope through gains from trade. Using highly detailed data f...

With declining costs of distributing digital products comes renewed interest in strategies for pricing goods with low marginal costs. In this paper, we evaluate customized bundling, a pricing strategy that gives consumers the right to choose up to a quantity M of goods drawn from a larger pool of N different goods for a fixed price. We show that th...

Innovators across all sectors of society are using information and communication technology to reshape economic and social activity. Even after the boom—and despite the bust—the process of structural change continues across organizational boundaries. Transforming Enterprise considers the implications of this change from a balanced, post-bust perspe...

We address the concept of poaching, the risk that in any transactional relationship, information that is transferred between parties for purposes specified in the contract will deliberately be used by the receiving party for purposes outside the contract, to its own economic benefit, and to the detriment of the party that provided the information....

Abstract We introduce the concept of poaching, the risk that in any transactional relationship information that is transferred between parties for purposes specified in the contract will deliberately be used by the receiving party, for purposes outside the contract, to its own economic benefit, and to the detriment of the party that provided the in...

The growth in the information technology (IT) services market and the increasing tendency of firms to outsource some or all of their IT functions necessitate better mechanisms for selecting IT vendors. For most projects, there are a multitude of potential vendors that differ in quality and other aspects that are difficult to assess at the time of c...

Abstract We examine IT contracting in one particular segment of the IT outsourcing market - the market for large - scale packaged software implementations such as Enterprise Resource

This paper examines the relationship between information technology and product variety. Consistent with prior theoretical work, we argue that IT and product variety are complements. IT innovations such as computer-aided design and flexible manufacturing technology have enabled firms to offer greater product variety at a reasonable cost. Similarly,...

This paper examines the relationship between information technology (IT) and product variety. Consistent with prior theoretical work, we argue that IT and product variety are complements. IT innovations such as computer aided design and flexible manufacturing technology have enabled firms to offer greater product variety at a reasonable cost. Simil...

Thesis (Ph. D.)--Massachusetts Institute of Technology, Sloan School of Management, 1996. Includes bibliographical references. by Lorin M. Hitt. Ph.D.

Internet-enabled markets are becoming viable venues for procurement of professional services. We investigate bidding behavior within the most active area of these early knowledge markets---the market for software development. These markets are important both because they provide an early view of the effectiveness of online service markets and becau...

We explore the effect of computerization on productivity and output growth using data from 527 large U.S. firms over 1987-1994. We find that computerization makes a contribution to measured productivity and output growth in the short term (using 1-year differences) that is consistent with normal returns to computer investments. However, the product...

We would like to thank Eric Bradlow, Eric Clemons, Paul Kleindorfer, Dennis Yao and three anonymous reviewers from the International Conference on Information Systems (ICIS) for comments on earlier drafts of this paper. This research was funded by the Wharton eBusiness Initiative (WeBI).

While there has been considerable research on the effect of telecommuting on worker's productivity and quality of work life, there is considerably less work on the managerial problems associated with selecting, monitoring and compensating workers involved in telecommuting. We propose a model based on contract theory to analyze the managerial decisi...

he ability to retain and lock in customers in the face of competition is a major concern for online businesses, especially those that invest heavily in advertising and customer ac- quisition. In this paper, we develop and implement an approach for measuring the magnitudes of switching costs and brand loyalty for online service providers based on th...

The Internet provides consumers with unprecedented amounts of product information. Although the competitive implications of better-informed consumers have been extensively studied, little attention has been paid to the impact of information on overall consumer demand. In this paper, we estimate the differences in demand for music CDs and cassettes...

Essays on the computer and the economy, particularly in relation to employment rates and to wage inequality. The widespread diffusion of information and communication technologies (ICT) has had controversial, seemingly paradoxical consequences. ICT are viewed as driving growth and employment in the United States, while contributing to European unem...

Enterprise Resource Planning (ERP)software systems integrate key business and management processes within and beyond a firm's boundary.Although the business value of ERP implementations has been extensively debated in trade periodicals in the form of qualitative discussion or detailed case studies, there is little large-sample statistical evidence...

Previous research has examined whether price dispersion exists in theoretically highly efficient Internet markets. However, much of the previous work has been focused on industries with low cost and undifferentiated products. In this paper, we examine the presence of price dispersion and product differentiation using data on the airline ticket offe...

Previous research has examined whether price dispersion exists in theoretically highly efficient Internet markets. However, much of the previous work has been focused on industries with low cost and undifferentiated products. In this paper, we examine the presence of price dispersion and product differentiation using data on the airline ticket offe...

We investigate the hypothesis that the combination of three related innovations—1) information technology (IT), 2) complementary workplace reorganization, and 3) new products and services—constitute a significant skill-biased technical change affecting labor demand in the United States. Using detailed firm-level data, we find evidence of complement...

Some implications of e-Commerce financial services firms are becoming clear. The web drives transparency, and increases the information endowment of all market participants. It is harder to manipulate customers' behavior, or to overcharge them. Transparency drives differential pricing. Not all customers can or should be charged the same prices. Tra...

In developed economies, production requires not only such traditional factors as capital and labor but also skills, organizational structures and processes, culture, and other factors collectively referred to as “intangible assets. ” Detailed investigation of some of these types of assets has found that they are often large in magnitude and have im...

Some effects of e-Commerce, and their implications for financial services firms, are becoming clear. The web drives transparency, and increases the information endowment of all market participants. It is harder to manipulate customers’ behavior, or to overcharge them, as their information endowment increases. Transparency drives differential pricin...

This paper examines the effects of two high-involvement approaches to organizing work in retail bank branches: worker discretion and cross-functional flexibility. Both discretion and flexibility have positive effects on productivity and sales effectiveness. The effects of discretion and flexibility on performance in conjunction with one another are...

What determines vertical scope? Transactions cost economics (TCE) has been the dominant paradigm for understanding "make" vs. "buy" choices. However, the traditional focus on empirically validating or refuting TCE has taken attention away from other possible drivers of scope, and it has rarely allowed us to understand the explanatory power of TCE v...

Abstract Previous research suggests that a decline in transactions costs leads to improved economic efficiency In this paper, we show that such a decline will introduce increasingly uninformed consumers into established markets Using a model of financial market inefficiency, we show that this increase in uninformed individuals can increase market r...

In this paper we explore the relationship between computers and productivity growth at the firm level. We apply standard productivity and growth accounting techniques to data from 600 large US firms over 1987-1994. While we find that computer make a positive and significant contribution to output growth in the short term (using 1 year differences),...

To understand the economic value of computers, one must broaden the traditional definition of both the technology and its effects. Case studies and firm-level econometric evidence suggest that: 1) organizational "investments" have a large influence on the value of IT investments; and 2) the benefits of IT investment are often intangible and disprop...

We introduce the concept of poaching, the risk that in any contractual relationship information that is transferred between parties for purposes specified in the contract will deliberately be used by the receiving party, for purposes outside the contract, to its own economic benefit, and to the detriment of the party that provided the information....

The Internet has had a profound effect on the financial service sector, dramatically changing the cost and capabilities for marketing, distributing and servicing financial products and enabling new types of products and services to be developed. This is especially true for retail financial services where widespread adoption of the Internet, the sta...

There has been recent interest in Internet-enabled markets for professional services. We investigate the characteristics of these markets by examining bidding behavior in the most active area of these early knowledge markets: the market for IT contractors. These markets are important both because they provide an early view of the effectiveness of o...

The ability to retain and lock-in customers in the face of competition is a major concern for e-commerce businesses. If a firm is able to build a significant amount of switching cost and brand loyalty, then it can benefit from a long-term flow of profits and recover investments in customer acquisition. In this paper, we propose a method to measure...