Observational analysis identifies conditions for intra-firm IT externalities in multibusiness firms, suggesting greater efficiency through coordination.
Key Points
Increased intra-firm IT externalities occur when business units achieve higher IT portfolio similarities and levels of IT centralization.
Data from 8,374 unique units within 866 multibusiness firms indicates a clear relationship between IT centralization and productivity gains.
The study highlights the importance of vertical and horizontal coordination for maximizing benefits from shared IT resources.
Firms with limited access to IT staff realized greater benefits from pooled IT investments, underscoring the role of human talent in digital resource utilization.