Managerial assessments of E-business investment opportunities: a field study

Managers charged with assessing investment opportunities for information technologies such as e-business projects face considerable uncertainty in their decision-making processes. Contemporary theories of the firm and the normative prescriptions thereof emphasize the potential for such investments to augment firm-level knowledge and relational capabilities. However, prior research has not examined the relative emphases that managers place on the knowledge and relational capability-augmenting characteristics of the e-business investments. In this paper, we develop a model to assess whether managerial evaluations of e-business investment opportunities are consistent with these normative and theoretical prescriptions. A test of the model using survey data on 485 project assessments by e-business managers suggests that managerial assessment and choice are guided by the criteria suggested by the knowledge and relational theories in evaluating potential e-business initiatives. Our results demonstrate that the ability of firms to exploit their intangible assets through such investments explicitly enter managerial calculus and provide new insights into the relative importance ascribed to these factors. The overarching insight is that managers ascribe relatively more weight to knowledge-based considerations than to relational considerations.