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Abstract
This paper focuses on developing economic theory on the interrelation between information technology investment components. Three functional forms to model the joint effects between components of investment on firm accounting profitability are identified and empirically tested. The results suggest that the complementarities between components of IT investment can be best modeled by using the multiplicative functional forms, providing a framework to model the joint effects of different factors that impact firm profitability.
Notes
1. AIC is a measure of the goodness of fit of an estimated statistical model. It is grounded in the concept of entropy, in effect offering a relative measure of the information lost when a given model is used to describe reality and can be said to describe the tradeoff between bias and variance in model construction, or loosely speaking that of precision and complexity of the model.
2. Prior research use IDG and CII extensively. The data are collected through questioners.
3. Two firms were newly established in the year 2000; the other four firms have an unusually low number of employees. The numbers of employees were 3, 6, 10, and 15 for these four public firms.
4. Currency unit = NT$ 100,000
5. Multicollinearity could bias the results against finding significant results.