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Reexamining the impact of information technology investment on productivity using regression tree and multivariate adaptive regression splines (MARS)

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Abstract

As health care costs increased significantly in the 1990s, investments in information technology (IT) in the health care industry have also increased continuously in order to improve the quality of patient care and to respond to government pressure to reduce costs. Several studies have investigated the impact of IT on productivity with mixed conclusions. In this paper, we revisit this issue and re-examine the impact of investments in IT on hospital productivity using two data mining techniques, which allowed us to explore interactions between the input variables as well as conditional impacts. The results of our study indicated that the relationship between IT investment and productivity is very complex. We found that the impact of IT investment is not uniform and the rate of IT impact varies contingent on the amounts invested in the IT Stock, Non-IT Labor, Non-IT Capital, and possibly time.

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Acknowledgments

The authors are grateful to Professors Byungtae Lee and Nirup M. Menon for sharing their dataset and Professor Menon’s SAS program with us, thus facilitating this study. We also thank the anonymous referees for their valuable comments. This research was supported in part by a grant from the 2007 Summer Research Program of the School of Business of Virginia Commonwealth University, Richmond, VA. USA.

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Authors and Affiliations

  1. Department of Information Systems and Technology Management, College of Business, The University of Texas at San Antonio, One UTSA Circle, San Antonio, TX, 78249, USA

    Myung Ko

  2. Department of Information Systems and The Information Systems Research Institute, Virginia Commonwealth University, Richmond, VA, 23284, USA

    Kweku-Muata Osei-Bryson

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  1. Myung Ko
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  2. Kweku-Muata Osei-Bryson
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Correspondence to Myung Ko.

Appendices

Appendix A: derivatives of IT Impact Formulas

In this appendix, we display the results of the differentiating with respect to loge T, each “IT Impact Formula” in Table 9.

Table A1 Derivatives of IT Impact Formulas
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Appendix B: impact of Administrative IT on Productivity

In this appendix, we display the regression splines model that describes the impact of Administrative IT on the Productivity of Non-IT Labor, and which is used to generate the results in Table 14.

Table B1 Basis functions in MARS model on Impact of Administrative IT on Productivity
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Ko, M., Osei-Bryson, KM. Reexamining the impact of information technology investment on productivity using regression tree and multivariate adaptive regression splines (MARS). Inf Technol Manage 9, 285–299 (2008). https://doi.org/10.1007/s10799-008-0036-z

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