Management Emotion and Firm’s Strategic IT Investment Propensity

ABSTRACT

Different from prior IS business value literature that has largely taken rational decision-making for granted, this paper investigated the impacts of management emotion on firms’ propensity of strategic IT investment. Based on 191 annual reports of 32 companies from three industries in a 6-year period (i.e. 2010–2015 fiscal year), we applied sentiment analysis to retrieve emotion tunes embedded in each report and analyzed their relationship with both the volume and the composition of three types of strategic IT investment signals (automate, informate, and transform) embedded in the annual report of the subsequent year. Results show that positive management emotion promotes firm’s propensity of all types of strategic IT investments and increases weights of informate and/or transform IT among all strategic IT investments. With positive management emotion, firms also show propensity of investing in strategic IT different from the industry’s dominant IT strategic role.

KEYWORDS:

• Management emotion
• IT investment propensity
• annual report

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

^a There were some equally performing companies, resulting in 11 (rather than 10) companies from the metal industry and 11 companies from the retail industry.

^b One company went initial public offering (IPO) in 2011 and its annual report for 2010 was not available from SEC website.