Knowing What We Know about IT and Business Value: Cause for Concern about Endogeneity Problems and Potential Solutions

Abstract

Do IT investments deliver business value? This long-standing question of IS interest is a causal question. Answers to this question are often sought through the use of econometric methods, which require careful attention to the issue of endogeneity for valid causal inference. Yet, concerns about endogeneity problems in econometric research persist despite the many quantitative techniques available for addressing them. Recent publications in strategic management and accounting have offered a few non-quantitative solutions, such as better writing and reviewing norms, better theory selection, and use of descriptive quantitative and qualitative methods. Not considered in these prescriptions is a relatively little-known category of explicitly causal case study research methods that originated in sociology and political science. This paper describes these methods, shows how they address endogeneity problems, and explores how they might complement statistical methods in the study of IT business value.