April 13, 2006
Faculty Awarded 2005-2006
McCombs Research
Excellence Grants
The McCombs Research Excellence Grant program recognizes and
promotes research excellence in the McCombs School by supporting
influential and high quality faculty research projects.
The grants are awarded based on competitive project proposals, and
can be used to cover substantive research expenses (such as data
gathering costs, graduate assistantships and database purchases).
Criteria for awarding Research Excellence Grants include the novelty
and likely academic impact of the proposed research, potential to
significantly enhance the research reputation of the faculty and the
school, and prospects for facilitating collaboration among faculty
members.
For the 2005-2006 period, Research Excellence Grants were awarded to
the following projects:
- "Interorganizational Fit and Alliance Performance" : Pamela Haunschild and Dovev Lavie
- "The More Fun = Less Good Intuition and its Impact on Decision Making" : Raj Raghunathan
- "Active Information Acquisition for Compliance Management": Maytal Saar-Tsechanksy
- "Impact of IT Capital on Business Value, Firm Scope, and M&A Performance": Gautam Ray, Prabhudev Konana and Bin Gu
- "Role of Information Technology in Integration and Performance of Mergers and Acquisitions" : Huseyin Tanriverdi
Interorganizational Fit and Alliance
Performance
Interfirm alliances have become prevalent in recent years, but also
tend to have very high failure rates. Prior research has highlighted
factors such as the alignment of corporate objectives and
complementarity resources of partners as potential contributors to
alliance success.
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Yet little attention has been paid to the possibility that
organizational “fit” between partners is also likely to affect
success. Our study will offer a conceptual framework and empirical
evidence to assess whether and how interorganizational fit at the
macro level, i.e., culture and managerial style, and at the micro
level, i.e., compatibility of operating procedures and
organizational routines, affects alliance performance.
Following a series of interviews with alliance managers we designed
a questionnaire that will be used in multiple companies in the
information technology sector. Our preliminary findings, based on
research in two companies, suggest that managers disregard concerns
of interorganizational fit when selecting partners, but also
recognize that organizational fit issues partially account for the
failure of their alliances.
Our study may enhance our understanding of why alliances that
initially seem promising due to the strategic fit between the
partners nevertheless fail for organizational reasons. Managers may
need to revisit their evaluation criteria for prospective partners
and learn how to bridge organizational differences in the course of
their alliances.
The More Fun = Less Good Intuition and its
Impact on Decision Making
This proposal builds on this thesis that people assume that
the hedonic potential or “funness” of stimuli (products, services,
activities, people etc.) is inversely related to their functional
potential or “goodness.”
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Subscription to such a belief is posited to be manifested in what
we term, the More Fun = Less Good intuition. If people do subscribe
to such an intuition, it is important to examine the intuitions’
validity: are they based on a true correlation between funness and
goodness?
It is also important to explore the impact of these intuitions on
decision-making: how does subscribing to the intuition influence
inferences, judgments and choices.
Based on a review of relevant literature and findings, we develop
propositions centered on these research questions. Our main
propositions include: (1) the More Fun = Less Good intuition is not
valid, (2) people use these intuitions, nevertheless, to make
inferences, judgments and choices. We propose to test these
propositions through a combination of surveys, secondary data
analyses and experimental approaches.
This proposal promises to make major theoretical and practical
contributions. From a theoretical standpoint, it points to the
biasing—and potentially pervasive—influence of an invalid lay-theory
(or intuition).
As such, important implications emerge for several social science
domains, including marketing, psychology, public policy, and
behavioral economics. From a practical standpoint, both marketers
and those interested in shaping public policy will benefit from the
issues explored in the proposal.
Active Information Acquisition for Compliance
Management
In recent years businesses are taking advantage of predictive data
mining to improve decision making. One area that benefits from these
new advances is compliance management, such as selection of tax
reports to be audited, or health care claims to be scrutinized for
fraud.
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At each point in time, an analyst must decide whether to audit a
case in order to recover or prevent a revenue loss. Such decisions
are increasingly being guided by predictive models built based on
outcomes of prior audits.
Because current policies initiate audits only if expected to result
in revenue collection, the available data exhibit an inherent
selection bias which undermines the induction of accurate predictive
models from the data. Attempts to alleviate this problem via
modeling of the selection bias result with only moderate
improvements.
In this research we propose to develop a new information acquisition
policy to help complement a biased sample with additional audits
that are particularly informative to improve model induction.
The newly acquired audits would be carefully selected so as to
improve non-compliance detection models rather than merely avoid
imminent losses. Because audits are costly, we aim to identify
audits that can maximize the expected improvement in model
performance or in revenue collection for a given acquisition (e.g.,
audit) cost.
Non-compliance is a substantial source of revenue loss that afflicts
a variety of industries. Medicare alone lost $11.9 billion to fraud
or other improper payments to providers in 2000 and the IRS reported
that the gap between taxes paid and taxes owed was about $312
billion in 2001, with merely one sixth of this amount eventually
collected.
To broaden the applicability of our research we aim to develop a
generic policy that can be applied to a variety of non-compliance
domains and that can be used to improve model induction of a variety
of modeling techniques.
Impact of IT Capital on Business Value,
Firm Scope, and M&A Performance
IT investments constitute about 50% of all capital investments in US
firms. Thus, over the last two decades, assessing business value of
IT has been a subject of much interest. Using aggregate measures of
IT capital, prior research has found that IT investments are
associated with increase in productivity.
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Also, related research has suggested that IT is associated with
decrease in vertical integration as firms increase their
specialization and use IT to coordinate more activities with
external partners.
However, these different streams of research that use aggregate
measures of IT capital, leave many questions open. In particular,
after decades of research, we still do not know exactly how IT
investments create business value and affect firm scope.
To answer these questions, we will unpack the constituents of IT
assets i.e., distinguish different types of IT capital and study how
they interact to affect value creation. We will also examine how IT
capital, particularly IT-enabled coordination capabilities affect
the degree of firms’ vertical and horizontal scope.
The contributions of IT capital are influenced by firm and industry
level characteristics as well. Therefore, we will also examine the
impact of firm and industry characteristics on IT driven value
creation. Overall, the goal of this research is to provide
guidelines to business executives and academic researchers regarding
how IT creates value in different environments and its strategic
impact on the scope of firms’ activities.
Role of Information Technology in Integration and Performance of Mergers and Acquisitions
Corporate mergers and acquisitions (M&A) are prevalent and economically significant across almost all sectors. As firms rely on information technology (IT) and digitize more and more of their business processes, the integration of IT systems of acquiring and acquired firms becomes a critical success factor in M&A integration and performance.
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The integration of IT systems enables the combined firm to
integrate business operations, standardize products, exploit
cross-business synergies, and comply with government regulations
such as the Sarbanes-Oxley Act.
Poor IT integration is one of the reasons why M&A integration
efforts fail and why potential synergies between the merging firms
remain unrealized. Despite the importance of IT in M&A integration
and performance, IT is among the least studied functions in
pre-merger discussions.
Practitioners and researchers focus mainly on statutory and
regulatory issues, financial and tax structuring, and business
synergies. The purpose of this research is to understand the role of
information technology in integration and performance of M&A.
The research will survey about a thousand M&A transactions completed
in the last three years to understand whether and how acquiring
firms did IT due diligence in the pre-merger planning and
negotiation phases, what kinds of IT strategies and management
practices they used during the implementation phase, and how and why
those IT strategies and management practices influenced performance
of the M&A.
The findings of this study will inform practitioners about IT best
practices of successful acquirers. The study will also contribute to
theory by explaining how and why IT management practices impact M&A
integration and performance.
For information on specific programs at the McCombs School, consult our contacts page. For media information, contact the Communications Director by phone at 512-471-3314 or by email at CommunicationsDirector@mccombs.utexas.edu.
