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Selecting the Most Desirable IT Portfolio Under Various Risk Tolerance Levels

Selecting the Most Desirable IT Portfolio Under Various Risk Tolerance Levels

Yu-Hsiang (John) Huang, Yu-Ju (Tony) Tu, Troy J. Strader, Michael J. Shaw, Ramanath (Ram) Subramanyam
Copyright: © 2019 |Volume: 32 |Issue: 4 |Pages: 19
ISSN: 1040-1628|EISSN: 1533-7979|EISBN13: 9781522563853|DOI: 10.4018/IRMJ.2019100101
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MLA

Yu-Hsiang (John) Huang, et al. "Selecting the Most Desirable IT Portfolio Under Various Risk Tolerance Levels." IRMJ vol.32, no.4 2019: pp.1-19. http://doi.org/10.4018/IRMJ.2019100101

APA

Yu-Hsiang (John) Huang, Yu-Ju (Tony) Tu, Strader, T. J., Shaw, M. J., & Ramanath (Ram) Subramanyam. (2019). Selecting the Most Desirable IT Portfolio Under Various Risk Tolerance Levels. Information Resources Management Journal (IRMJ), 32(4), 1-19. http://doi.org/10.4018/IRMJ.2019100101

Chicago

Yu-Hsiang (John) Huang, et al. "Selecting the Most Desirable IT Portfolio Under Various Risk Tolerance Levels," Information Resources Management Journal (IRMJ) 32, no.4: 1-19. http://doi.org/10.4018/IRMJ.2019100101

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Abstract

To better assist decision-makers (e.g., enterprise executives) in selecting the most desirable IT portfolio, this study proposes a new IT Portfolio Efficient Frontier model that incorporates the decision-maker's risk tolerance levels. The proposed model, built on portfolio optimization along with experimental design and simulation data, considers three IT portfolio scenarios: even distribution-based IT portfolios, uneven distribution-based IT portfolios, and dominant IT portfolios. Our findings show that the IT portfolio efficient frontiers derived from both an even distribution-based IT portfolio and an uneven distribution-based IT portfolio have a relatively positive relationship between IT portfolio risk and return. Our findings also indicate that if IT investments are part of a dominant IT portfolio, an inflection point of the IT portfolio efficient frontier appears under the decision-maker's medium risk tolerance level, and the most desirable IT portfolio is generated when a decision maker's risk tolerance level is medium or higher.

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